LONG TEST – FINANCIAL MARKET

A bond is simply a form of an interest-bearing note.

• True

• False

Bonds of major corporations are traded on bond exchanges.

• True

• False

Bondholders claims on the assets of the corporation rank ahead of stockholders.

• True

• False

A secured bond is called a debenture bond and is backed only by the general creditworthiness of the corporation.

• True

• False

If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a convertible bond.

• True

• False

The key difference between a note and a bond is that note maturities are usually less than one year, while bond maturities are one year or more.

• True

• False

Treasury bonds are issued by state and local governments.

• True

• False

Most newly issued municipal bonds are insured because investors are unwilling to purchase uninsured municipal bonds out of fear that the issuer may default.

• True

• False

When a corporation issues bonds, it executes a contract with the bondholders, known as a bond debenture.

• True

• False

An equal stream of periodic payments is called an annuity.

• True

• False