Question 1

Although there is a great deal of information on the Internet about stock investments,it is impossible to evaluate bonds using the Internet.

Accepted Answer

A) True 
 B)False

Question 2

Although unpopular a few years back,more and more corporations are issuing bearer bonds.

Accepted Answer

A) True 
 B)False

Question 3

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

Accepted Answer

A) True 
 B)False

Question 4

What is the annualized yield of a 200 days T-Bill with a purchase price of $940.00?

Accepted Answer

A)   20.0%
B)   17.15%
C)   9.40%
D)   6.38%
E)   11.90%F) All of the above
G) A) and B)

Question 5

The main reason why investors choose Canadian government securities is the above average interest rates that these securities pay.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is false?

Accepted Answer

A)   The federal government sells bonds and securities to finance both the national debt and the government's ongoing activities.
B)   Federal government securities carry a reduced risk of default when compared to corporate securities.
C)   Federal government treasury securities offer lower interest rates than corporate bonds.
D)   Most individual investors that purchase treasury bills,notes,and bonds bid competitively.
E)   Treasury securities may be purchased through banks or brokers.F) A) and B)
G) C) and E)

Question 7

The bond debenture is a legal document that details all of the conditions relating to a bond issue.

Accepted Answer

A) True 
 B)False

Question 8

A bond that can be exchanged,at the owner's option,for a specified number of shares of the corporation's stock is called a(n) ____________ bond.

Accepted Answer

A)   debenture
B)   mortgage
C)   indenture
D)   convertible
E)   subordinatedF) All of the above
G) A) and B)

Question 9

What is the approximate market value for a $1,000 corporate bond that pays 8 percent interest when comparable bonds are paying 9 percent interest?

Accepted Answer

A)   $80
B)   $90
C)   $889
D)   $1,000
E)   $1,125F) All of the above
G) C) and D)

Question 10

Treasury bills are issued in $5,000 units with 10-year maturities.

Accepted Answer

A) True 
 B)False

Question 11

If a bond is purchased at a price above the face value,the yield to maturity is:

Accepted Answer

A)   greater than the stated interest rate.
B)   the same as the stated interest rate.
C)   less than the stated interest rate.
D)   zero.
E)   of no significance.F) C) and D)
G) B) and D)

Question 12

A registered bond is registered for principal and for interest.

Accepted Answer

A) True 
 B)False

Question 13

A bond issued with detachable coupons that the bondholder must present to a paying agent or the issuer in order to receive interest payments is called a __________ bond.

Accepted Answer

A)   registered coupon
B)   certified
C)   revenue
D)   zero-coupon
E)   general obligationF) A) and B)
G) All of the above

Question 14

The highest bond rating issued by the Dominion Bond Rating Service (DBRS) is

Accepted Answer

A)   AAA.
B)   Aaa.
C)   A+.
D)   BB.
E)   Excellent.F) All of the above
G) A) and B)

Question 15

Justin Parkinson purchased a bond at a price far below its face value,makes no interest payments,and will be redeemed at its face value at maturity.In all likelihood,he purchased a(n) ____________ bond.

Accepted Answer

A)   debenture
B)   convertible
C)   indenture
D)   registered
E)   zero-couponF) All of the above
G) B) and C)

Question 16

A registered coupon bond is registered for interest,but not for the principal amount.

Accepted Answer

A) True 
 B)False

Question 17

Generally,Canadian government securities issued by the Treasury Department

Accepted Answer

A)   are not graded because they are risk-free.
B)   receive the DBRS' AAA rating.
C)   receive the Standard & Poor's AA rating.
D)   receive the Treasury Department's "risk-free" rating.
E)   are given the same rating by all the bond rating companies.F) A) and B)
G) C) and E)

Question 18

Identify the incorrect statement.

Accepted Answer

A)   Canada Savings Bonds are marketable bonds.
B)   Long-term bonds embody more inflation risk than short-term bonds.
C)   A bond denominated in U.S.dollars subjects a Canadian bondholder to foreign currency risk.
D)   Bonds sold before they mature can incur capital gains or losses.
E)   Provincial bonds are relatively risk freeF) All of the above
G) B) and E)

Question 19

The yield on a 365 days T-Bill with a purchase price of $989.50 is 10.6%.

Accepted Answer

A) True 
 B)False

Question 20

Canada Savings Bonds are issued in $1,000 units with a maturity of more than 1 year,but not more than 10 years.

Accepted Answer

A) True 
 B)False

Exam 12: Investing in Stocks

What is the annualized yield of a 200 days T-Bill with a purchase price of $940.00?

Correct AnswerverifiedShow Answer

Although unpopular a few years back,more and more corporations are issuing bearer bonds.

Correct AnswerverifiedShow Answer

Canada Savings Bonds are issued in $1,000 units with a maturity of more than 1 year,but not more than 10 years.

Correct AnswerverifiedShow Answer

Treasury bills are issued in $5,000 units with 10-year maturities.

Correct AnswerverifiedShow Answer

A bond that can be exchanged,at the owner's option,for a specified number of shares of the corporation's stock is called a(n) ____________ bond.

Correct AnswerverifiedShow Answer

A bond issued with detachable coupons that the bondholder must present to a paying agent or the issuer in order to receive interest payments is called a __________ bond.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

Correct AnswerverifiedShow Answer

If a bond is purchased at a price above the face value,the yield to maturity is:

Correct AnswerverifiedShow Answer

Justin Parkinson purchased a bond at a price far below its face value,makes no interest payments,and will be redeemed at its face value at maturity.In all likelihood,he purchased a(n) ____________ bond.

Correct AnswerverifiedShow Answer

What is the approximate market value for a $1,000 corporate bond that pays 8 percent interest when comparable bonds are paying 9 percent interest?

Correct AnswerverifiedShow Answer

A registered bond is registered for principal and for interest.

Correct AnswerverifiedShow Answer

Identify the incorrect statement.

Correct AnswerverifiedShow Answer

Although there is a great deal of information on the Internet about stock investments,it is impossible to evaluate bonds using the Internet.

Correct AnswerverifiedShow Answer

The highest bond rating issued by the Dominion Bond Rating Service (DBRS) is

Correct AnswerverifiedShow Answer

The bond debenture is a legal document that details all of the conditions relating to a bond issue.

Correct AnswerverifiedShow Answer

Generally,Canadian government securities issued by the Treasury Department

Correct AnswerverifiedShow Answer

The yield on a 365 days T-Bill with a purchase price of $989.50 is 10.6%.

Correct AnswerverifiedShow Answer

A registered coupon bond is registered for interest,but not for the principal amount.

Correct AnswerverifiedShow Answer

The main reason why investors choose Canadian government securities is the above average interest rates that these securities pay.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified