Question 1

Collateral trust bonds are secured, through a pledge of real property.

Accepted Answer

A) True 
 B)False

Question 2

A subordinated debenture is a more secure investment than a mortgage bond.

Accepted Answer

A) True 
 B)False

Question 3

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 4

The yield to maturity takes into account both interest income from the purchase date until the maturity date and the difference between the purchase price and the maturity value.

Accepted Answer

A) True 
 B)False

Question 5

Assume that you purchased a $1,000 Rogers bond that pays 6 percent interest.What is the amount of interest you would receive each six months?

Accepted Answer

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

Question 6

Assume that you purchase a $1,000 corporate bond that pays 5.5 percent interest.What is the amount of interest that you receive each year?

Accepted Answer

A)  $1,000
B)  $1,055
C)  $55
D)  $550
E)  $0F) D) and E)
G) B) and E)

Question 7

The current yield for a bond is determined by dividing dollar amount of annual interest by the current market value.

Accepted Answer

A) True 
 B)False

Question 8

The Canada Savings Bond Payroll Program does not allow you to save through regular payroll deductions.

Accepted Answer

A) True 
 B)False

Question 9

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) B) and D)
G) A) and B)

Question 10

A corporate bond rated AAA by the DBRS would be suitable for:

Accepted Answer

A)  every investor.
B)  very cautious investors.
C)  speculators.
D)  no one because the bond issue is in default.
E)  knowledge investors.F) B) and E)
G) All of the above

Question 11

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders, with respect to both income and assets is called a(n) :

Accepted Answer

A)  debenture bond.
B)  mortgage bond.
C)  preemptive bond.
D)  subordinated debenture.
E)  treasury bond.F) A) and D)
G) A) and E)

Question 12

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) A) and D)
G) C) and D)

Question 13

Mortgage bonds are agreements that pledge land, buildings, or equipment as securities for a loan.

Accepted Answer

A) True 
 B)False

Question 14

Generally, interest on corporate bonds is paid every

Accepted Answer

A)  six months.
B)  three months.
C)  month.
D)  nine months.
E)  year.F) C) and D)
G) A) and E)

Question 15

When a bond is selling for more than its face value, it is said to be selling at a:

Accepted Answer

A)  discount.
B)  premium.
C)  commission.
D)  conservative value.
E)  prospectus value.F) C) and D)
G) A) and B)

Question 16

In what year were Canada Savings Bonds discontinued for sale?

Accepted Answer

A)  2015
B)  2016
C)  2017
D)  2018
E)  2014F) C) and D)
G) B) and E)

Question 17

A corporate bond rated B by the DBRS would be suitable for:

Accepted Answer

A)  every investor.
B)  very cautious investors.
C)  speculators.
D)  no one because the bond issue is in default.
E)  knowledge investors.F) B) and E)
G) A) and B)

Question 18

Interest payments for registered bonds are mailed directly to the bondholder of record.

Accepted Answer

A) True 
 B)False

Question 19

A government security issued in minimum units of $1,000 with maturities that are less than one year is called a:

Accepted Answer

A)  subordinated bond.
B)  treasury bond.
C)  treasury note.
D)  treasury bill.
E)  savings bond.F) A) and E)
G) A) and D)

Question 20

For government bonds, the bid price is the price that a dealer is willing to pay for a government security.

Accepted Answer

A) True 
 B)False

Exam 12: Investing in Bonds

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

The current yield for a bond is determined by dividing dollar amount of annual interest by the current market value.

Correct AnswerverifiedShow Answer

Interest payments for registered bonds are mailed directly to the bondholder of record.

Correct AnswerverifiedShow Answer

For government bonds, the bid price is the price that a dealer is willing to pay for a government security.

Correct AnswerverifiedShow Answer

A government security issued in minimum units of $1,000 with maturities that are less than one year is called a:

Correct AnswerverifiedShow Answer

Mortgage bonds are agreements that pledge land, buildings, or equipment as securities for a loan.

Correct AnswerverifiedShow Answer

A corporate bond rated B by the DBRS would be suitable for:

Correct AnswerverifiedShow Answer

Assume that you purchased a $1,000 Rogers bond that pays 6 percent interest.What is the amount of interest you would receive each six months?

Correct AnswerverifiedShow Answer

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders, with respect to both income and assets is called a(n) :

Correct AnswerverifiedShow Answer

Generally, interest on corporate bonds is paid every

Correct AnswerverifiedShow Answer

When a bond is selling for more than its face value, it is said to be selling at a:

Correct AnswerverifiedShow Answer

Identify the incorrect statement.

Correct AnswerverifiedShow Answer

The Canada Savings Bond Payroll Program does not allow you to save through regular payroll deductions.

Correct AnswerverifiedShow Answer

Collateral trust bonds are secured, through a pledge of real property.

Correct AnswerverifiedShow Answer

A corporate bond rated AAA by the DBRS would be suitable for:

Correct AnswerverifiedShow Answer

A subordinated debenture is a more secure investment than a mortgage bond.

Correct AnswerverifiedShow Answer

Assume that you purchase a $1,000 corporate bond that pays 5.5 percent interest.What is the amount of interest that you receive each year?

Correct AnswerverifiedShow Answer

The yield to maturity takes into account both interest income from the purchase date until the maturity date and the difference between the purchase price and the maturity value.

Correct AnswerverifiedShow Answer

In what year were Canada Savings Bonds discontinued for sale?

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

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