WorksheetsAdvanced Financial Literacy Unit #3 Test Review Activity
Total questions: 25
Worksheet time: 1hrs 13mins
Check ALL of the answers below would BEST describe bonds.
Like stocks, they provide ownership stakes in companies.
Like stocks, bonds are publicly traded on exchanges.
Companies can use bonds to borrow money without the fuss of going to a bank.
Bonds are also known as fixed-income investments.
Which of the following would NOT use a bond to borrow money?
State government
Multinational corporation
Homeowner
School district
The entity that uses a bond to borrow money is called the
debtholder
issuer
investment bank
exchange
The amount being borrowed by the bond issuer is called the bond ________
coupon.
principal.
maturity.
duration.
Bonds use a _____________________ payment in order to pay the pay the ___________________ on the bond principal.
coupon, profits
coupon, interest
dividend, profits
rent, profits
Check ALL that apply. If the yield is rising for a bond, it is because ________________.
other bonds with similar coupon rates and maturity dates are being sold at a discount.
other bonds with similar coupon rates and maturity dates are being bought at a premium.
its price is falling.
its price is also rising.
Check ALL that apply. If the yield is falling for a bond, it is because ________________.
other bonds with similar coupon rates and maturity dates are being sold at a discount.
other bonds with similar coupon rates and maturity dates are being bought at a premium.
its price is also falling.
its price is rising.
The issuance price for a bond is called ____________ value, and is usually ____________.
par, $10,000.
par, $1,000.
maturity, $1,000.
issuance, $10.
Check ALL that apply. U.S. Treasury bonds are considered the least risky investments because the federal government
has never defaulted on its debt obligations.
has tax revenue that exceeds spending.
credit agencies nearly always give them AAA ratings.
can issue money.
Check ALL that apply about a bond's maturity date.
The bond issuer will pay the bond holder the face value of the bond.
The bond holder receives his coupon payment
Affects the duration of bond.
Date on which the bond will mature.
Check ALL that apply regarding credit rating agencies.
Assign letter ratings to determine a bond's creditworthiness.
Includes Standard & Poor's, Moody's, and Fitch.
Work with the issuer to sell bonds to the investors.
Guarantee bondholder's will not lose their principal.
Check ALL that apply about investment grade corporate bonds?
Less likely to default than high yield corporate bonds.
Tend to offer higher yields than U.S. Treasury bonds.
Also known as “junk bonds.”
Issued by companies with stable earnings.
Check ALL that apply about high yield corporate bonds.
More likely to default than investment grade corporate bonds.
Tend to offer lower yields than U.S. Treasury bonds.
Also known as “junk bonds.”
Issued by companies with stable earnings.
Check ALL that apply regarding agency bonds.
Include Fannie Mae
Freddie Mac &
Tennessee Valley Authority
Issued by government-sponsored enterprises (GSEs) or federal agencies.
Less risky than U.S. Treasury bonds
Are always held until maturity.
Check ALL that applies about why municipal bonds might be a good investment.
provide investors a steady cash flow.
are backed by either taxes or a project’s revenue like stadium ticket sales.
less risky than U.S. Treasury bonds.
are tax-free from federal income taxes.
Which bank cash instrument is NOT FDIC insured?
Savings Account
Checking account
Certificate of Deposit
Money Market Account
Which cash instrument would most likely provide the highest rate of return?
Checking Account
Bank savings account.
Certificate of Deposit with a 6-month maturity.
Certificate of Deposit with a 3-year maturity.
Which cash instrument would most likely provide the lowest rate of return?
Money Market Account
Bank savings account.
Certificate of Deposit with a 6-month maturity.
Certificate of Deposit with a 3-year maturity.
Which bond would most likely provide the lowest rate of return?
International government bond issued by North Korea
U.S. Treasury Bond with a 15-year maturity.
High-yield corporate bond issued by Donald Trump's Truth Social
U.S. T-Bill with a 6-Month maturity.
Which bond would most likely provide the highest rate of return?
International government bond issued by Germany.
Illinois toll road revenue Muni bond.
High-yield corporate bond issued by X (formerly Twitter).
U.S. T-Bill with a 3-Month maturity.
Steph is a 36-year-old NBA basketball player looking to add a fixed-income investment to his retirement account. He is moderate investor. Which response below would be his BEST choice?
Money market account
U.S. Treasury 2-year Note
Freddie Mac Bond
J.P. Morgan 10-year Bond with a AA rating.
Caitlin is a 22-year-old WNBA basketball player looking to add a fixed-income investment to her retirement account. She is moderately aggressive investor. Which response below would be her BEST choice?
Bank savings account
U.S. Treasury 10-year Note
Illinois G.O. Muni Bond
Uber 15-year Bond with a C- rating.
Lionel is a 36-year-old pro soccer player looking to add a fixed-income investment to his retirement account. He is conservative investor. Which response below would be his BEST choice?
Money market account
U.S. Treasury 5-year Note
City of Chicago Stadium Revenue Muni Bond
Exxon Mobil 7-year Bond with a AA rating.
Donald is a 78-year-old former politician and celebrity apprentice star who needs a safe place for his cash. Which response below would be his BEST choice?
Bank savings account
U.S. Treasury 10-year Note
Illinois G.O. Muni Bond
Uber 15-year Bond with a C- rating.
Maria, a 55-year-old teacher, owns a 2015 Civic. However, she is saving to buy a new car on her 60th Birthday. Which response below is her BEST choice?
Bank savings account
5-Year Certificate of Deposit
U.S. Treasury 2-Year Note
Tesla 10-Year Bond BB Rated
