Financial Literacy Quiz

Which of the following is an example of short-term debt?

• Issuing common stock

• Issuing bonds

• Purchasing goods or services on account

• Issuing preferred stock

What is considered long-term debt?

• Purchasing goods or services on account

• Issuing common stock

• Issuing bonds or notes payable

• Issuing preferred stock

Which of the following is a method of equity financing?

• Purchasing goods or services on account

• Issuing bonds

• Issuing common or preferred stock

• Issuing notes payable

What is a bond in the context of finance?

• A legal agreement to perform a service

• A form of a loan directly between corporations and investors

• A type of stock that represents ownership in a company

• A certificate of deposit at a bank

What does a business typically gain in return for issuing a bond?

• Shares in the company

• Cash

• Products or services

• Company ownership

What is a Secured Bond?

• A bond with no backing

• A bond backed by the government

• A bond backed by collateral

• A bond that is exchangeable for company stock

What is collateral in the context of a Secured Bond?

• A promise to pay in the future

• A form of insurance policy

• A from of value pledged to secure a loan

• A mutual agreement between two parties without any assets involved

What is a bond in financial terms?

• A legal agreement for marriage.

• A form of an interest-bearing note that requires periodic interest payments.

• A type of stock that represents ownership in a company.

• A certificate of debt issued by the government only.

What must be repaid at the maturity date of a bond?

• The coupon rate.

• The interest payments.

• The face amount or principal of the bond.

• The bond indenture.

What is the interest rate to be paid on the face amount of a bond called?

• Maturity rate.

• Dividend rate.

• Contract rate or coupon rate.

• Principal rate.