Finance multiple choice | Business & Finance homework help

Question 1.1. Yankee bonds are issued by the U.S. government, but sold only to foreign investors. (Points : 1)

True

False

Question 2.2. Treasury strip bonds are popular because

(Points : 1)

I. they are high-quality bonds.

II. they have a wide range of maturities.

III. they are very liquid.

IV. their income is not taxed until the bonds mature.

I and III only

I, II and III only

I, II and IV only

I, II, III and IV

Question 3.3. Which of the following statements concerning equipment trust certificates are correct?

(Points : 1)

I. Equipment trust certificates are typically used to raise funds for purchasing airplanes and railroad engines.

II. Equipment trust certificates are usually issued with a single maturity date.

III. Equipment trust certificates normally mature in 20 to 30 years.

IV. Equipment trust certificates generally offer above-average yields.

I and IV only

II and IV only

I and III only

I, III and IV only

Question 4.4. In an inflationary environment, the interest payments on Treasury inflation-indexed obligations increase over time. (Points : 1)

True

False

Question 5.5. Bondholders can earn income both from interest and from capital gains. (Points : 1)

True

False

Question 6. 6. Discuss at least three differences between investing in stocks and investing in bonds. (Points : 1)

1.Corporations are obliged to pay a fixed interest rate on bonds while dividends on share are discretionary.

 

2. Interest paid on bonds provide a tax-shield while dividend payments do not

 

3. Interest on Bonds are a predictable constant stream that would not change while dividend payments can vary

 

Question 7.7. Collateralized mortgage obligations are relatively safe investments except (Points : 1)

when interest rates rise.

when inflation is high.

when home prices decline.

when mortgage holders refinance frequently.

Question 8.8. Investment-grade bonds are more interest rate sensitive than junk bonds. (Points : 1)

True

False

Question 9.9. Which one of the following statements concerning a global view of the bond market is correct? (Points : 1)

The United States today accounts for about seventy-five percent of the available fixed-income securities worldwide.

U.S. pay bonds distribute both interest and principal payments in euros.

Foreign bonds, like junk bonds, have high default risk.

Exchange rate fluctuations influence the returns earned on foreign-pay bond holdings.

Question 10.10. If a bond rating moves from a BB to a BBB rating (Points : 1)

the bond will still be classified as junk.

it must also move from a Ba to a Baa rating.

the market yield on the bond will rise.

the market price of the bond will rise.

Question 11.11. Under normal economic conditions, the major source of risk faced by investors who purchase investment grade bonds is (Points : 1)

purchasing power risk.

interest rate risk.

liquidity risk.

default risk.

Question 12.12. The initial call price of an 8% bond could be as high as $1,080. (Points : 1)

True

False

Question 13.13. A bond which has a deferred call (Points : 1)

does not have to be redeemed when it reaches maturity.

can be retired at any time prior to maturity provided six months notice is given.

cannot be retired for a specific period of time after which it can be retired at any time.

can be retired at any time during the initial call period but after that time can not be redeemed prior to maturity.

Question 14.14. Which of the following factors are included in the rating analysis of a corporate bond?

(Points : 1)

I. the issue’s indenture provisions.

II. the liquidity position of the issuing company.

III. the issuing company’s relative debt burden.

IV. the stability of the company’s earnings.

I and II only

I, II and III only

II, III and IV only

I, II, III and IV

Question 15.15. Which one of the following combination of features causes bond prices to be the most volatile? (Points : 1)

low coupon, short maturity

high coupon, short maturity

low coupon, long maturity

high coupon, long maturity

Question 16.16. Convertible bonds are especially attractive when stock prices are falling. (Points : 1)

True

False

Question 17.17. The Franklin Company issued a 6% bond three years ago at par value. The market interest rate on comparable bonds today is 5%. The Franklin Company bond currently pays ________ a year in interest and the bond sells at a ________. (Points : 1)

$60; discount

$60; premium

$50; discount

$50; premium

Question 18.18. Each interest payment on a 6%, semi-annual bond is $60. (Points : 1)

True

False

Question 19.19. One of the major problems associated with mortgage-backed securities is that (Points : 1)

the principal portion of each payment is considered taxable income.

they are refundable.

they are self-liquidating.

they are serial issues.

Question 20.20. When bonds are initially added to an all-equity portfolio the (Points : 1)

level of risk of the portfolio is impacted more than the rate of return.

rate of return on the portfolio is impacted more than the level of risk.

level of risk and the rate of return are equally impacted.

rate of return is not impacted but the level of risk is lowered.

Question 21.21. Which of the following types of risk affect bonds?

(Points : 1)

I. call risk.

II. business risk.

III. purchasing power risk.

IV. liquidity risk.

III and IV only

II, III and IV only

I, III and IV only

I, II, III and IV

Question 22.22. Which one of the following variables has the greatest effect on bond prices? (Points : 1)

economic growth

interest rates

inflation

stock market returns

Question 23.23. In general, foreign-pay bonds provide ________ rates of return and ________ diversification effects for U.S. investors. (Points : 1)

non-competitive; positive

competitive; positive

non-competitive; negative

competitive; negative

Question 24.24. Which of the following characteristics apply to collateralized mortgage obligations?

(Points : 1)

I. All bondholders receive a pro-rata share of all interest payments.

II. CMOs are derivative securities created from mortgage-backed bonds.

III. All principal payments are paid to the shortest remaining tranche.

IV. CMOs have definite maturity dates for each tranche.

I and II only

I and III only

I, II and III only

II, III and IV only

Question 25.25. The risk premium component of a bond’s market interest rate is related to the characteristics of the particular bond and its issuer. (Points : 1)

True

False

Question 26.26. The par value of a Treasury inflation-indexed obligation is established as $1,000 over the life of the bond. (Points : 1)

True

False

Question 27.27. When the economy is moving toward a recession, the yield on riskier bonds will tend to (Points : 1)

rise.

fall.

stagnate.

become volatile.

Question 28.28. Municipal bonds are most attractive to residents of states with high income tax rates. (Points : 1)

True

False

Question 29.29. The first tranche of a collateralized mortgage obligation has (Points : 1)

the greatest default risk.

the greatest interest rate risk.

the greatest prepayment risk.

the greatest total risk.

Question 30.30. Mortgage-backed securities are self-liquidating. (Points : 1)

True

False

Premium Custom Essays
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.