Bonds Quiz

What are Government Bonds used for?

• To raise money for private company projects

• To fund government operations and public projects

• To finance personal investments

• To expand factory production

Which type of bond is issued by companies to raise capital for their business activities?

• Government Bonds

• Corporate Bonds

• Municipal Bonds

• Savings Bonds

What is a reason why individuals might choose to invest in bonds?

• To take high risks

• For a safe and stable income

• To quickly double their investment

• For immediate cash returns

What is an example of a project that might be funded by a Municipal Bond?

• Building a new corporate headquarters

• Issuing a new line of smartphones

• Building a new library

• Funding a private research institution

Why might bonds be considered a safer investment than stocks?

• They offer a higher rate of return

• They are less risky and help preserve capital

• They can be converted into stocks at any time

• They are guaranteed to double in value

What is a risk of investing in bonds when interest rates rise?

• The value of existing bonds may increase.

• The value of existing bonds may decrease.

• The issuer of the bond will repay the borrowed money more quickly.

• The bond will mature faster.

What is credit risk in the context of bonds?

• The risk that the bond will mature later than expected.

• The risk that the bond's interest payments will increase.

• The risk that the issuer of the bond may not be able to repay the borrowed money.

• The risk that the bond's interest payments will decrease.

What happens when the rate of inflation is higher than the interest rate earned on a bond?

• The purchasing power of the investment increases.

• The bond matures immediately.

• The bond's value increases significantly.

• The purchasing power of the investment may decrease.

What is a call risk associated with some bonds?

• The risk that the bond will be called for repayment before its maturity.

• The risk that the bond's interest rate will be called to increase.

• The risk that the bond will be called to change its issuer.

• The risk that the bond will be called to extend its maturity date.

What are government bonds?

• Bonds issued by toy companies.

• Bonds issued by the government.

• Bonds issued by local governments.

• Bonds issued by banks.