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Multiple Choice Quiz
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1
A "yankee" bond is a bond:
A)Sold in the United States by a company in the U.S.
B)Sold in the United States by a company from some other country.
C)Sold in Europe by a company from the United States.
D)None of these options.
2
The written agreement between a corporation and the bondholder's representative is called:
A)The debenture
B)The collateral maintenance agreement
C)The indenture
D)The prospectus
3
Bonds marketed both internationally and domestically are called
A)Yankee bonds
B)Foreign bonds
C)Eurobonds
D)Global bonds
4
The Alfa Co. has a 12% bond outstanding which pays interest on February 1st and July 1st. Today is March 1st and you are planning to purchase one of these bonds. How much will you pay in accrued interest?
A)6%
B)2%
C)1%
D)12%
5
Which of the following loans is typically secured?
A)Sinking fund debenture
B)Mortgage bond
C)Floating rate note
D)Eurobond
6
Floating-rate bonds have adjustable rates to protect real rates of return against inflation. The rates paid are limited by:
A)The put provisions of the issues
B)A floor rate which sets the minimum
C)A cap rate which sets the maximum
D)Both B and C
7
Short-term debt issued to investors by large companies is called:
A)Indenture
B)Debenture
C)Commercial paper
D)Equipment trust certificate
8
Which of the following loans is typically secured?
A)Equipment trust certificate
B)Debenture
C)Floating rate note
D)Sinking fund debenture
9
Zero-coupon bonds are also called:
A)Original issue discount bonds
B)Pure discount bonds
C)Debentures
D)Both A and B
10
A mortgage backed security has an indirect claim on
A)Homes
B)Cars
C)Stocks
D)Bonds
11
If a firm defaults, who gets paid first?
A)Senior debt holders
B)Junior debt holders
C)Common stockholders
D)Preferred stockholders
12
A _____________ obliges the borrower to repay the debt if there is a change in control and the bonds are downrated.
A)Sinker
B)Poison call
C)Poison put
D)Collar
13
The call feature of a bond creates a _________ on the bond price.
A)floor
B)ceiling
C)guaranteed return
D)par value
14
Which of the following is not a common feature of project finance?
A)The project is established as a separate company.
B)Risk is not distributed. Rather, the project company bears all risks.
C)Equity ownership is privately held by a small group of investors.
D)It involves a complex series of contracts.
15
The convertible bond combines a basic bond and
A)Another bond
B)A call option
C)A put option
D)A loan guarantee





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