Chapter 7 Vocabulary Quiz

What is a Bond in financial terms?

• A legal agreement to use property that belongs to another person.

• A certificate representing a promise to pay a definite amount of money at a stated interest rate on a specified maturity date.

• A type of debt secured by a specific asset or property.

• An equity security representing ownership in a corporation with voting rights.

What does Bond rating measure?

• The stated annual interest rate for a bond.

• The price at which a share of stock can be bought and sold in the stock market.

• The quality and safety of a company's debt.

• The increase in the value between the purchase price and the maturity value.

What is Capital gain?

• The portion of company profits.

• The price at which a share of stock can be bought and sold in the stock market.

• The increase in the value between the purchase price and the maturity value.

• A type of debt secured by a specific asset or property.

What is Commercial paper?

• A legal agreement to use property that belongs to another person.

• An equity security representing ownership in a corporation with voting rights.

• A type of debt secured by a specific asset or property.

• Unsecured, short-term debt instruments issued by corporations.

What is Common stock?

• A certificate representing a promise to pay a definite amount of money at a stated interest rate on a specified maturity date.

• An equity security representing ownership in a corporation with voting rights.

• A corporate bond without collateral.

• A portion of company profits.

What is the Coupon rate?

• The quality and safety of a company's debt.

• The stated annual interest rate for a bond.

• The increase in the value between the purchase price and the maturity value.

• The price at which a share of stock can be bought and sold in the stock market.

Who is a Creditor in the context of bonds?

• A person who buys a bond, thus lending money to the organization.

• An individual or company that assists companies with issuing new securities.

• A company that offers stock to outside investors for the first time.

• A person who enters into a legal agreement to use property that belongs to another person.

What is a Debenture bond?

• A type of debt secured by a specific asset or property.

• A certificate representing a promise to pay a definite amount of money at a stated interest rate on a specified maturity date.

• A corporate bond without collateral.

• An equity security representing ownership in a corporation with voting rights.

What is a Dividend?

• The stated annual interest rate for a bond.

• The quality and safety of a company's debt.

• A portion of company profits.

• The price at which a share of stock can be bought and sold in the stock market.

What is an Initial public offering (IPO)?

• A legal agreement to use property that belongs to another person.

• When a company offers stock to outside investors for the first time.

• An agreement that allows a company to obtain additional loans without a new loan application.

• A type of debt secured by a specific asset or property.