It represents a loan by the holder to the issuer.
It is a certificate of ownership in the corporation.
It is commonly issued to raise working capital for a corporation.
It is junior in preference to convertible preferred stock.
A) II and III.
B) II and IV.
C) I and III.
D) I and IV.
Answer: C) I and III.
A) limited partnership in rental real estate.
B) U.S. treasury notes.
C) bank insured CDs.
D) NYSE listed common stock.
Answer: B) U.S. treasury notes.
Minimum face value of $100,000.
Maturities rarely extend beyond 360 days.
May be sold on the secondary market.
A) I and III.
B) II and III.
C) I, II and III.
D) I and II.
Answer: C) I, II and III.
A) they usually have maturities of less than 1 year.
B) they are secured obligations of the issuing bank.
C) they are usually issued in denominations of $100,000 to $1 million.
D) they are readily marketable.
Answer: B) they are secured obligations of the issuing bank.
Backed by money market deposits.
Negotiated maturities and yields.
Issued by commercial banks.
Not registered with the SEC.
A) I and II.
B) I and III.
C) III and IV.
D) II and IV.
Answer: D) II and IV.
A) short-term debt.
B) intermediate debt.
C) long-term equity.
D) long-term debt.
Answer: A) short-term debt.
I. Issued in amounts of $100,000 to $1 million.
II. Typically pay interest on a monthly basis.
III. Always mature in 1 to 2 years.
IV. Trade in the secondary market.
A) II and IV.
B) I and IV.
C) I and III.
D) II and III.
Answer: B) I and IV.
A) $25,000.00
B) $50,000.00
C) $100,000.00
D) $10,000.00
Answer: C
A) Treasury notes.
B) Preferred stock in a growth company.
C) Common stock in an electric utility.
D) Treasury STRIPS/zero-coupon bonds.
Answer: Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) are zero-coupon bonds paying no interest. Thus, there is no income to reinvest during the holding period and therefore no reinvestment risk.
A) Treasury bills.
B) jumbo (negotiable) CDs.
C) commercial paper.
D) newly issued Treasury notes.
Answer: D) newly issued Treasury notes.
American depositary receipts.
Commercial paper.
Corporate bonds.
Jumbo (negotiable) certificates of deposit.
A) I and III.
B) I and II.
C) II and IV.
D) III and IV.
Answer: A) I and III.
A) Commercial paper.
B) Treasury bills.
C) Banker's acceptances.
D) Newly issued Treasury notes.
Answer: D) Newly issued Treasury notes.
A) Municipal bonds.
B) Treasury bills.
C) Zero-coupon Treasury bonds.
D) Investment-grade corporate bonds.
Answer: C) Zero-coupon Treasury bonds.
Interest is paid semiannually.
The discount is in lieu of periodic interest payments.
The discount must be accreted and is taxed annually.
The discount must be accreted annually with taxation deferred until maturity.
A) II and III.
B) I and III.
C) I and IV.
D) II and IV.
Answer: A) II and III.
A) Corporate bond fund.
B) AA corporate bond with 7 years to maturity.
C) Zero-coupon bond with 15 years to maturity.
D) Zero-coupon bond with 5 years to maturity.
Answer: C) Zero-coupon bond with 15 years to maturity.
The investor is 65 years old and needs the reliability of current income.
The investor is 45 years old and has purchased these in an IRA rollover account and wants the assurance of funds for retirement.
The investor is 30 years old and has a newborn child and wishes to assure funds for a college education.
The investor is 20 years old, has just received an inheritance, and wishes to shelter income for as long as possible.
A) I and IV.
B) III and IV.
C) II and III.
D) I and II.
Answer: C) II and III.
Zero-coupon bonds are sold at a deep discount from face value.
Zero-coupon bonds pay periodic interest payments.
The owner of a zero-coupon bond receives his return only at maturity.
A) I and III.
B) I and II.
C) II and III.
D) I, II and III.
Answer: A) I and III.
Common stock.
Cumulative preferred stock.
Money market mutual funds.
TIPS.
A) II and III.
B) III and IV.
C) I and IV.
D) I and II.
Answer: C) I and IV.
A) Treasury bills.
B) Treasury notes.
C) Treasury bonds.
D) TIPS.
Answer: A) Treasury bills.
A) $300 is considered a return of principal.
B) $300 is taxed as ordinary income.
C) $300 is taxed as long-term capital gain.
D) The investors cost basis has been reduced to $9,700.
Answer: B) $300 is taxed as ordinary income.