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Multiple Choice Quiz
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1
Short-term debt matures within which one of the following time periods?
A)six months
B)one year
C)eighteen months
D)two years
E)five years
2
Funded debt is a term generally used to define which kind of debt?
A)collateralized
B)mortgage
C)unsecured
D)long-term
E)short-term
3
A $1,000 face value bond matures in 15 years, has an annual coupon of 6.6 percent, and an offer price of 98.25. What is the annual interest payment?
A)$64.85
B)$65.50
C)$66.00
D)$67.18
E)$67.50
4
A bond has a face value of $1,000 and an offer price of 101.625. What is the current market price of this bond if the coupon rate is 7.5 percent?
A)$984.01
B)$992.50
C)$1,000.00
D)$1,016.25
E)$1,018.75
5
If a bond is callable but has no deferred call provision then the bond:
A)cannot be called.
B)can be called at any time.
C)can be called but only at a premium.
D)can be called at a discount.
E)cannot be called unless the bondholder is agreeable.
6
Which of the following are included in the issuance of publicly traded bonds?
I. approval of the issue by the board of directors
II. direct placement with a financial institution
III. 20-day waiting period
IV. SEC registration
A)I and IV only
B)II and III only
C)I, III, and IV only
D)I, II, and III only
E)I, II, III, and IV
7
What is the document which contains the agreement between the bond issuer and a trust company called?
A)issue statement
B)bond covenant
C)collateral statement
D)mortgage deed
E)indenture
8
A trust company that signs an indenture agreement with a bond issuer is obligated to do which of the following?
I. represent bondholders if the issuer defaults on any payments
II. ensure the terms of the indenture agreement are followed
III. manage the sinking fund, if applicable
IV. represent the best interests of the bond issuer
A)I and II only
B)III and IV only
C)I, II, and III only
D)II, III, and IV only
E)II and III only
9
Which of the following are commonly found in a bond indenture agreement?
I. protective covenants
II. description of property pledged as security
III. names of the original bondholders
IV. sinking fund arrangements
A)I and IV only
B)II and III only
C)I and II only
D)I, II, and IV only
E)I, II, III, and IV
10
Which one of the following bond values changes over time?
A)par value
B)denomination
C)face value
D)principal value
E)market value





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