Chapter 15 Investing in Bonds

Topics: Bond, Bonds, Municipal bond Pages: 16 (3710 words) Published: May 23, 2012
CHAPTER 15 Investing in Bonds



| |A bond debenture is a legal document that details all of the conditions relating to a bond issue. | | |One reason corporations sell corporate bonds is to help finance their ongoing business activities. | | |A mortgage bond is sometimes referred to as a secured bond. | | |A sinking fund is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue. | | |A revenue bond is a bond backed by the full faith, credit, and unlimited taxing power of the government that issued it. |


| |A government security issued in minimum units of $100 with maturities that may be as long as one year is called a | | |treasury bill. | | |treasury note. | | |treasury bond. | | |municipal bond. | | |A bond that may provide tax-free interest income is called a | | |corporate debenture bond. | | |corporate indenture bond. | | |Federal T-bill. | | |municipal bond. | | |The current yield for a bond | | |is stated on the bond certificate. | | |is determined by dividing annual income amount by a bond’s current market price. | | |is not a factor when evaluating a bond investment. | | |takes into account the relationship among a bond’s maturity value, the time to maturity, the current price, and the | | |dollar amount of interest. | | |Which of the following statements is true? | | |All bonds must be resold in the primary market. | | |Bonds may be purchased in either the primary or secondary market. | | |Bonds cannot be resold, and must be held until maturity. | | |Generally, commissions to purchase a $1,000 bond are between $50 and $75. | | |A bond that is sold at a price far below its face, makes no interest payments, and is redeemed for its face value at | | |maturity is called a ____________ bond....
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