4. KHANH HOA_ CHUONG 7

require the owner to clip coupons attached to the bonds and send them to the issuer to receive coupon payments.

A) Bearer B) Registered C) Treasury D) Corporate

• A

• B

• C

• D

The yield to maturity is the annualized discount rate that equates the future coupon and principal payments to the initial proceeds received from the bond offering.

A) True B) False

• True

• False

Note maturities are usually , while bond maturities are .

A) less than 10 years; 10 years or more

B) 10 years or more; less than 10 years

C) less than 5 years; 5 years or more

D) 5 years or more; less than 5 years

• less than 10 years; 10 years or more

• 10 years or more; less than 10 years

• less than 5 years; 5 years or more

• 5 years or more; less than 5 years

Investors in Treasury notes and bonds receive interest payments from the Treasury.

A) annual B) semiannual C) quarterly D) monthly

• annual

• semiannual

• quarterly

• monthly

Since 2001, the Treasury has relied heavily on -year bonds to finance the U.S. budget deficit.

A) 50 B) 2 C) 10 D) 5

• 50

• 2

• 10

• 5

Interest earned from Treasury bonds is

A) exempt from all income tax.

B) exempt from federal income tax.

C) exempt from state and local taxes.

D) subject to all income taxes.

• exempt from all income tax.

• exempt from federal income tax.

• exempt from state and local taxes.

• subject to all income taxes.

Treasury bond auctions are normally conducted only at the beginning of each year.

A) True B) False

• True

• False

bids for Treasury bonds specify a price that the bidder is willing to pay and a dollar amount of securities to be purchased.

A) Competitive B) Noncompetitive C) Negotiable D) Non negotiable

• Competitive

• Noncompetitive

• Negotiable

• Non negotiable

Treasury bond dealers

• A) quote an ask price for customers who want to sell existing Treasury bonds to the dealers.

• B) profit from a very wide spread between bid and ask prices in the Treasury securities market.

• C) may trade Treasury bonds among themselves.

• D) make a primary market for Treasury bonds.

Under the STRIP program created by the Treasury, stripped securities are created and sold by the Treasury.

A) True B) False

• True

• False