Bonds & Fed Review

Which of the following is the best definition for a bond?

• A fixed-income tool that is a loan from a company or government.
• A partial ownership of a company's assets and revenue.
• The amount of money it takes to invest in a company.
• A donation is is tax deductible for a local charity.

A bond is considered a fixed income tool because it...

• will be guaranteed to be paid back to the investor
• is fixed to your current income and will pay you back according to your monthly income.
• will provide you a annual payment, in the form of interest.
• will be available for you to use when you retire.

The maturity date of a bond refers to what?

• The day when the loan will begin to pay interest.
• The day when the full value of the loan is due to the investor.
• The day when the loan is first purchased.
• The day when the loan is resold to another investor.

What is the coupon rate?

• The interest rate you will receive when you retire.
• The discount you get for investing in a company.
• The amount in interest you will make each year until maturity.
• The amount you are required to pay for a bond.

Which of the following will impact the coupon rate of a loan?

• Only the credit rating of the company.
• The credit rating of a company and the maturity of the bond.
• The stock performance of a company or government.
• The maturity of the bond.

If interest rates rise, how will that impact your bond?

• The price of the bond will go down due to a lack in demand.
• The price of the bond will go up due to an increase in demand.
• The coupon rate will increase to match the new interest rate.
• The coupon rate will decrease in order to make the bond more profitable.

There are 12 cities that make up the Federal Open Market Committee. Which city is not part of the committee?

• Dallas
• Atlanta
• Seattle
• Richmond

True or False: if you attempt to sell a bond, you may end up selling it for less than what you bought it for due to a decrease in coupon payments.

• True
• False

Which of the following is not a type of bond we discussed as an investment tool?

• Government Bond
• Corporate Bond
• Personal Bond
• Municipal Bond

Which type of bond is sold by a business, like Microsoft or Apple, to try and raise extra funds?

• Government Bond
• Municipal Bond
• Personal Bond
• Corporate Bond