Bonds and Investments Quiz

What is a bond?

• A loan given to an individual by an investor

• A loan given to a bank by an investor

• A loan given to a government by an investor

• A loan given to a company by an investor

What is the annual interest rate on a bond known as?

• Coupon rate

• Yield rate

• Default rate

• Interest rate

What is the risk that the issuer defaults on paying back the principal known as?

• Market risk

• Interest rate risk

• Default risk

• Credit risk

Which type of issuer generally offers bonds with a relatively low yield?

• Government

• Individual

• Bank

• Corporation

What is the risk that interest rates will go up, and any bonds you own will be worth less if sold before their maturity date known as?

• Credit risk

• Market risk

• Default risk

• Interest rate risk

What do many investors use to pursue their investment goals?

• Mix of stocks and bonds

• Only stocks

• Real estate

• Only bonds

What can help bond investors gauge the financial strength of the bond issuer?

• Credit rating agencies

• Stock market trends

• Economic indicators

• Financial news channels

What is an investor's return of the original investment known as?

• Principal investment

• Yield rate

• Interest payment

• Coupon rate