Chapter 15 – Investing in Bonds
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99. (p. 520) Which one of the following bonds is most apt to have the highest interest rate? All
of the bonds mature in 10 years.
100. (p. 503) A convertible bond:
101. (p. 506) Which of the following reasons explain why investors purchase bonds?
Chapter 15 – Investing in Bonds
102. (p. 509) What is bond laddering?
103. (p. 511) Which one of the following bonds would likely have the lowest risk?
104. (p. 512) Treasury bills:
Chapter 15 – Investing in Bonds
105. (p. 514) Which one of the following is issued by state and local governments?
106. (p. 521) Which one of the following is a ‘junk’ bond?
107. (p. 504) An issue of serial bonds:
Chapter 15 – Investing in Bonds
108. (p. 504) Which of the following terms applies to a bond issue for which the issuer puts
money aside at regular intervals for the purpose of redeeming the bonds?
109. (p. 522) Scott Turner has a bond with 10 years to maturity, a face value of $1,000, an 8%
interest rate, and a market price of $800. What is the yield-to-maturity on this bond?
Chapter 15 – Investing in Bonds
110. (p. 522) Elizabeth Cherry has a bond that has 10 years to maturity, a face value of $1,000,
an 8% interest rate, and a market price of $1,200. What is the yield-to– maturity on this bond?
111. (p. 508) Which of the following can cause a bond investor to lose money?
Chapter 15 – Investing in Bonds
112. (p. 513) Which of the following statements is true with respect to U.S. Treasury issues?
113. (p. 520) The quality rating given by Standard & Poor’s to highly-speculative bonds is:
114. (p. 501) A ______ is a financially independent firm that acts as the bondholder’s
representative.
Chapter 15 – Investing in Bonds
115. (p. 501) Bond interest is typically paid:
116. (p. 507) Which one of the following bonds pays interest only at maturity?
Chapter 15 – Investing in Bonds
117. (p. 500-503) Define five of these six terms.
(A) corporate bond (B) bond indenture (C) trustee (D) mortgage bond (E) debenture bond (F)
convertible bond
118. (p. 506-508) In what ways can a bond investor make money?
Chapter 15 – Investing in Bonds
119. (p. 508) How do interest rates in the economy affect the price of a corporate bond?
120. (p. 508) Bond’s are generally considered a relatively safe investment. How is it possible to
lose money on bonds?
Chapter 15 – Investing in Bonds
121. (p. 512-513) What is the difference between a U.S. government Treasury bill, Treasury note,
and Treasury bond?
122. (p. 514) Corporate and Treasury bonds generally produce more interest revenue than
municipal bonds. Why do investors choose to buy municipal bonds?
Chapter 15 – Investing in Bonds
123. (p. 520) You are trying to evaluate two bond issues. One bond issue is rated “A” by
Moody’s; the other is rated “B.” How important are the bond ratings issued by Moody’s
Investors Service? Based on your feedback, would you purchase the “A” bond or the “B”
bond?
124. (p. 522) If your primary goal is current yield, which one of these bonds is the wiser
investment? Bond A: $1,000 corporate bond that pays 7 percent and has a current market
value of $800; or Bond B: $1,000 corporate bond that pays 8.25 percent and has a current
market value of $950?