Question 1

Gwendolyn and Jack Francis are typical investors.As they approach retirement,which approach will they likely take?

Accepted Answer

A)   They will choose more speculative investments.
B)   Their choices of investments will not change.
C)   They will choose more conservative investments.
D)   They will choose more risky investments.
E)   They will move all of their money into certificates of deposit.F) C) and E)
G) A) and B)

Question 2

A call feature

Accepted Answer

A)   Allows bondholders to convert their bonds to a specified number of shares of common stock.
B)   Is not available for corporate bonds.
C)   Allows the corporation to buy outstanding bonds from current bondholders before the maturity date.
D)   Is available only with government securities.
E)   Is guaranteed by the corporation.F) A) and D)
G) B) and E)

Question 3

Cliff Clarkson is 70 years old and wants to diversify his investment portfolio.He must decide if he should invest in tax-free municipal bonds or in corporate bonds.The tax-free bonds are highly rated and pay 4.5%.The corporate bonds are more speculative and pay 6.5%
a.If Cliff is in the 25% tax bracket,what is the taxable equivalent yield for the municipal bond?
b.If you were Cliff,would you choose the municipal bonds or the corporate bonds?
 Justify your answer.

Accepted Answer

a.Taxable equivalent yield = Tax-exempt ...

Question 4

Which of the following statements is true?

Accepted Answer

A)   Convertible corporate bonds are more secure than government bonds.
B)   Convertible bonds often pay 1-2% more interest than nonconvertible bonds.
C)   Because of the conversion feature, it is not necessary to evaluate convertible corporate bonds.
D)   Not all convertible bonds are quality investments.
E)   Even after convertible bondholders convert their investments to common stock, the bondholders still receive interest payments.F) None of the above
G) C) and E)

Question 5

Continuing to evaluate your investment after its purchase can reduce your inflation risk.

Accepted Answer

A) True 
 B)False

Question 6

Generally,interest on corporate bonds is normally paid every

Accepted Answer

A)   Month.
B)   Three months.
C)   Six months.
D)   Nine months.
E)   Year.F) A) and D)
G) B) and E)

Question 7

Contrast the types of investments typically chosen for the following two investors:
a.Retired couple with $850,000 in retirement savings.
b.A 25-year-old single investor with a secure high-paying job.

Accepted Answer

The young investor would likely choose t...

Question 8

Describe the steps you can take to manage an economic crisis.

Accepted Answer

Seven steps include these:
1.Establish a...

Question 9

At the least,you should keep purchase records of the actual dollar cost of your investments plus any commissions or fees paid.

Accepted Answer

A) True 
 B)False

Question 10

A valid long-term investment goal is

Accepted Answer

A)   Saving $4,000 per year for 40 years for retirement.
B)   Spending less than $500 per month for housing.
C)   Accumulating $3,000 in a savings account over the next 18 months.
D)   Using credit cards less in the next six months.
E)   Purchasing a $250,000 life insurance policy within the next four years.F) B) and E)
G) B) and C)

Question 11

Which of the following is not a U.S.Treasury security?

Accepted Answer

A)   Treasury note
B)   Treasury bond
C)   Treasury Inflation-Protected Securities (TIPS) 
D)   Treasury stock
E)   Treasury billF) A) and C)
G) B) and E)

Question 12

To survive a financial crisis,you should track the value of your stock,mutual fund,and retirement accounts.

Accepted Answer

A) True 
 B)False

Question 13

A U.S.government security issued in minimum units of $100 with a 30-year maturity is called a

Accepted Answer

A)   Subordinated bond.
B)   Treasury bill.
C)   Treasury note.
D)   Treasury bond.
E)   Savings bond.F) B) and C)
G) C) and D)

Question 14

Which of the following features is a benefit for investors of municipal bonds?

Accepted Answer

A)   Interest may be tax-exempt at the federal level.
B)   Interest may be tax-deductible at the federal level.
C)   The face value may be tax-deductible at the state level.
D)   The face value may be a tax credit at the federal level.
E)   All payments are tax-deductible at all governmental levels.F) B) and C)
G) B) and E)

Question 15

The potential return of any investment should be directly related to the risk that the investor assumes.

Accepted Answer

A) True 
 B)False

Question 16

Describe asset allocation and its importance.

Accepted Answer

Asset allocation is the process of sprea...

Question 17

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n) ____________ fund.

Accepted Answer

A)   serial
B)   sinking
C)   debenture
D)   indenture
E)   moneyF) A) and D)
G) B) and E)

Question 18

Assume that you purchase a $1,000 bond issued by Harley-Davidson that pays 6% interest each year,paid semiannually.What is the amount of each interest payment?

Accepted Answer

A)   $3.00
B)   $6.00
C)   $30.00
D)   $60.00
E)   $1,000F) All of the above
G) A) and D)

Question 19

What is the difference between a U.S.government Treasury bill,Treasury note,and Treasury bond?

Accepted Answer

Treasury bills,sometimes called T-bills,...

Question 20

List five items that appear in a corporate bond quote.

Accepted Answer

Possible answers include these:
• Corpor...

Exam 11: Investing Basics and Evaluating Bonds

At the least,you should keep purchase records of the actual dollar cost of your investments plus any commissions or fees paid.

Correct Answer
verified

Correct Answer
verified
a.Taxable equivalent yield = Tax-exempt ...
View Answer

List five items that appear in a corporate bond quote.

Correct Answer
verified
Possible answers include these:
• Corpor...
View Answer

To survive a financial crisis,you should track the value of your stock,mutual fund,and retirement accounts.

Correct Answer
verified

Describe the steps you can take to manage an economic crisis.

Correct Answer
verified
Seven steps include these:
1.Establish a...
View Answer

Generally,interest on corporate bonds is normally paid every

Correct Answer
verified

Assume that you purchase a $1,000 bond issued by Harley-Davidson that pays 6% interest each year,paid semiannually.What is the amount of each interest payment?

Correct Answer
verified

What is the difference between a U.S.government Treasury bill,Treasury note,and Treasury bond?

Correct Answer
verified
Treasury bills,sometimes called T-bills,...
View Answer

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n) ____________ fund.

Correct Answer
verified

Gwendolyn and Jack Francis are typical investors.As they approach retirement,which approach will they likely take?

Correct Answer
verified

Which of the following features is a benefit for investors of municipal bonds?

Correct Answer
verified

Continuing to evaluate your investment after its purchase can reduce your inflation risk.

Correct Answer
verified

Which of the following is not a U.S.Treasury security?

Correct Answer
verified

A U.S.government security issued in minimum units of $100 with a 30-year maturity is called a

Correct Answer
verified

Contrast the types of investments typically chosen for the following two investors: a.Retired couple with $850,000 in retirement savings. b.A 25-year-old single investor with a secure high-paying job.

Correct Answer
verified
The young investor would likely choose t...
View Answer

A valid long-term investment goal is

Correct Answer
verified

The potential return of any investment should be directly related to the risk that the investor assumes.

Correct Answer
verified

A call feature

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Describe asset allocation and its importance.

Correct Answer
verified
Asset allocation is the process of sprea...
View Answer

Exam 11: Investing Basics and Evaluating Bonds

At the least,you should keep purchase records of the actual dollar cost of your investments plus any commissions or fees paid.

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Taxable equivalent yield = Tax-exempt ...View AnswerShow Answer

List five items that appear in a corporate bond quote.

Correct AnswerverifiedPossible answers include these:• Corpor...View AnswerShow Answer

To survive a financial crisis,you should track the value of your stock,mutual fund,and retirement accounts.

Correct AnswerverifiedShow Answer

Describe the steps you can take to manage an economic crisis.

Correct AnswerverifiedSeven steps include these:1.Establish a...View AnswerShow Answer

Generally,interest on corporate bonds is normally paid every

Correct AnswerverifiedShow Answer

Assume that you purchase a $1,000 bond issued by Harley-Davidson that pays 6% interest each year,paid semiannually.What is the amount of each interest payment?

Correct AnswerverifiedShow Answer

What is the difference between a U.S.government Treasury bill,Treasury note,and Treasury bond?

Correct AnswerverifiedTreasury bills,sometimes called T-bills,...View AnswerShow Answer

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

Gwendolyn and Jack Francis are typical investors.As they approach retirement,which approach will they likely take?

Correct AnswerverifiedShow Answer

Which of the following features is a benefit for investors of municipal bonds?

Correct AnswerverifiedShow Answer

Continuing to evaluate your investment after its purchase can reduce your inflation risk.

Correct AnswerverifiedShow Answer

Which of the following is not a U.S.Treasury security?

Correct AnswerverifiedShow Answer

A U.S.government security issued in minimum units of $100 with a 30-year maturity is called a

Correct AnswerverifiedShow Answer

Contrast the types of investments typically chosen for the following two investors: a.Retired couple with $850,000 in retirement savings. b.A 25-year-old single investor with a secure high-paying job.

Correct AnswerverifiedThe young investor would likely choose t...View AnswerShow Answer

A valid long-term investment goal is

Correct AnswerverifiedShow Answer

The potential return of any investment should be directly related to the risk that the investor assumes.

Correct AnswerverifiedShow Answer

A call feature

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Describe asset allocation and its importance.

Correct AnswerverifiedAsset allocation is the process of sprea...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
a.Taxable equivalent yield = Tax-exempt ...
View Answer

Correct Answer
verified
Possible answers include these:
• Corpor...
View Answer

Correct Answer
verified

Correct Answer
verified
Seven steps include these:
1.Establish a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Treasury bills,sometimes called T-bills,...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The young investor would likely choose t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Asset allocation is the process of sprea...
View Answer