Question 1

A call provision on bonds normally

Accepted Answer

A)   allows the firm to sell new bonds at par value.
B)   gives the firm to sell new bonds above market value.
C)   allows the firm to sell bonds to the Treasury.
D)   allows the firm to buy back bonds that it previously issued.E) None of the above
F) A) and C)

Question 2

Rule 144A creates liquidity for securities that are privately placed.

Accepted Answer

A) True 
 B)False

Question 3

A variable-rate bond allows

Accepted Answer

A)   investors to benefit from declining rates over time.
B)   issuers to benefit from rising market interest rates over time.
C)   investors to benefit from rising market interest rates over time.
D)   none of the above.E) All of the above
F) A) and B)

Question 4

All of the bonds issued by a particular company will have the same maturity, price, and credit rating.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not mentioned in your text as a protective covenant?

Accepted Answer

A)   a limit on the amount of dividends a firm can pay
B)   a limit on the corporate officers' salaries a firm can pay
C)   the amount of additional debt a firm can issue
D)   the appointment of a trustee in all bond indentures
E)   All of the above are mentioned in the text as protective covenants.F) All of the above
G) A) and E)

Question 6

The Financial Reform Act of 2010 established the __________ to provide oversight for credit rating agencies.

Accepted Answer

A)   Federal Ratings Bureau
B)   Office of Credit Ratings
C)   Office of Agency Supervision
D)   Ratings Oversight CommissionE) A) and B)
F) B) and C)

Question 7

____ are not primary purchasers of bonds.

Accepted Answer

A)   Insurance companies
B)   Finance companies
C)   Mutual funds
D)   Pension fundsE) None of the above
F) All of the above

Question 8

Rule 144A allows small individual investors to trade privately placed bonds (and some other securities) with each other without requiring the firms that issued the securities to register themwith the SEC.

Accepted Answer

A) True 
 B)False

Question 9

The primary investors in bond markets are institutional investors such as commercial banks, bond mutual funds, pension funds, and insurance companies.

Accepted Answer

A) True 
 B)False

Question 10

Bond dealers specialize in small transactions (less than $100,000) in order to enable small investors to trade bonds.

Accepted Answer

A) True 
 B)False

Question 11

Bonds issued by ____ are backed by the federal government.

Accepted Answer

A)   the Treasury
B)   AAA-rated corporations
C)   state governments
D)   city governmentsE) A) and B)
F) B) and C)

Question 12

Bonds are issued in the primary market through a telecommunications network.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would not be a likely example of a protective covenant provision?

Accepted Answer

A)   a limit on the amount of dividends a firm can pay
B)   a limit on the corporate officers' salaries a firm can pay
C)   the amount of additional debt a firm can issue
D)   a call featureE) B) and C)
F) All of the above

Question 14

Jim purchases $10,000 par value bonds with a 10 percent coupon rate and a 7 percent yield to maturity. Jim will hold the bonds until maturity. Thus, he will earn a return of ____ percent.

Accepted Answer

A)   8
B)   7
C)   10
D)   More information is needed to answer this question.E) A) and B)
F) A) and C)

Exam 7: Bond Markets

The Financial Reform Act of 2010 established the __________ to provide oversight for credit rating agencies.

Correct Answer
verified

Bonds issued by ____ are backed by the federal government.

Correct Answer
verified

Jim purchases $10,000 par value bonds with a 10 percent coupon rate and a 7 percent yield to maturity. Jim will hold the bonds until maturity. Thus, he will earn a return of ____ percent.

Correct Answer
verified

A variable-rate bond allows

Correct Answer
verified

____ are not primary purchasers of bonds.

Correct Answer
verified

Bond dealers specialize in small transactions (less than $100,000) in order to enable small investors to trade bonds.

Correct Answer
verified

Rule 144A allows small individual investors to trade privately placed bonds (and some other securities) with each other without requiring the firms that issued the securities to register themwith the SEC.

Correct Answer
verified

A call provision on bonds normally

Correct Answer
verified

Which of the following is not mentioned in your text as a protective covenant?

Correct Answer
verified

The primary investors in bond markets are institutional investors such as commercial banks, bond mutual funds, pension funds, and insurance companies.

Correct Answer
verified

Bonds are issued in the primary market through a telecommunications network.

Correct Answer
verified

All of the bonds issued by a particular company will have the same maturity, price, and credit rating.

Correct Answer
verified

Rule 144A creates liquidity for securities that are privately placed.

Correct Answer
verified

Which of the following would not be a likely example of a protective covenant provision?

Correct Answer
verified

Exam 7: Bond Markets

The Financial Reform Act of 2010 established the __________ to provide oversight for credit rating agencies.

Correct AnswerverifiedShow Answer

Bonds issued by ____ are backed by the federal government.

Correct AnswerverifiedShow Answer

Jim purchases $10,000 par value bonds with a 10 percent coupon rate and a 7 percent yield to maturity. Jim will hold the bonds until maturity. Thus, he will earn a return of ____ percent.

Correct AnswerverifiedShow Answer

A variable-rate bond allows

Correct AnswerverifiedShow Answer

____ are not primary purchasers of bonds.

Correct AnswerverifiedShow Answer

Bond dealers specialize in small transactions (less than $100,000) in order to enable small investors to trade bonds.

Correct AnswerverifiedShow Answer

Rule 144A allows small individual investors to trade privately placed bonds (and some other securities) with each other without requiring the firms that issued the securities to register themwith the SEC.

Correct AnswerverifiedShow Answer

A call provision on bonds normally

Correct AnswerverifiedShow Answer

Which of the following is not mentioned in your text as a protective covenant?

Correct AnswerverifiedShow Answer

The primary investors in bond markets are institutional investors such as commercial banks, bond mutual funds, pension funds, and insurance companies.

Correct AnswerverifiedShow Answer

Bonds are issued in the primary market through a telecommunications network.

Correct AnswerverifiedShow Answer

All of the bonds issued by a particular company will have the same maturity, price, and credit rating.

Correct AnswerverifiedShow Answer

Rule 144A creates liquidity for securities that are privately placed.

Correct AnswerverifiedShow Answer

Which of the following would not be a likely example of a protective covenant provision?

Correct AnswerverifiedShow Answer

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