Bond and Investment Quiz

A bondholder becomes a creditor of the issuing organization.

• True

• False

Bonds are considered fixed-income securities because they impose fixed financial obligations on issuers.

• True

• False

A debenture is secured by specific physical assets of the issuing company.

• True

• False

Government of Canada bonds are always secured by physical assets.

• True

• False

The legal document outlining the details of a bond issue is called a trust deed.

• True

• False

When market interest rates rise above a bond’s coupon rate, the bond price typically:

• Rises

• Falls

• Stays the same

• Doubles

A bond priced at 104 is trading at:

• Par

• Discount

• Premium

• Face value

A $1,000 bond quoted at 97 costs:

• $1,070

• $970

• $903

• $1,003

Yield to maturity represents:

• The coupon divided by par

• The annual return if the bond is held to maturity

• The interest rate on Treasury bills

• The difference between bid and ask price

Bonds that pay no periodic interest and are issued at a discount are called:

• Step-up bonds

• Index-linked notes

• Strip bonds

• Floating-rate notes