Classification of Bonds Quiz

What are treasury bonds (also called treasuries)?

• Bonds issued by state and local governments

• Bonds issued by business firms

• Bonds issued by the government

• Bonds issued by foreign entities

Which bonds are exposed to default risk because they are issued by business firms?

• Treasury bonds

• Corporate bonds

• Municipal bonds

• Foreign bonds

What are municipal bonds (or munis)?

• Bonds issued by businesses to finance operations

• Bonds issued by state and local governments

• Bonds issued internationally to foreign markets

• Bonds backed by fixed assets

Bonds issued by foreign governments or foreign corporations are known as:

• Foreign bonds

• Treasury bonds

• Corporate bonds

• Municipal bonds

What is the par value of a bond?

• The interest rate paid on the bond

• The stated face value of the bond

• The amount of the annual coupon payment

• The maturity value minus interest

What is the coupon payment of a bond?

• The price paid to purchase the bond

• The specified number of dollars of interest paid each year

• The bond’s interest rate when it matures

• The amount returned when the bond is sold

Which bond has a fixed interest rate for its entire life?

• Fixed-rate bond

• Floating-rate bond

• Zero-coupon bond

• Income bond

What type of bond has an interest rate that fluctuates with changes in general interest rates?

• Fixed-rate bond

• Floating-rate bond

• Index bond

• Callable bond

A bond that pays no annual interest but is sold at a discount below par is called:

• Fixed-rate bond

• Income bond

• Zero-coupon bond

• Convertible bond

What is the maturity date of a bond?

• The date when the bond is first issued

• The date the bond can be redeemed early

• The specified date when the par value must be repaid

• The date interest payments stop