11. Which of the following defines a note? I. secured II. unsecured III. maturity less than 10 years

11. Which of the following defines a note?
I. secured
II. unsecured
III. maturity less than 10 years
IV. maturity in excess of 10 years
A. III only
B. I and III only
C. I and IV only
D. II and III only
E. II and IV only

12. A sinking fund is managed by a trustee for which
one of the following purposes?
A. paying interest payments
B. early bond redemption
C. converting bonds into equity securities
D. paying preferred dividends
E. reducing coupon rates

13. A bond that can be paid off early at the issuer’s
discretion is referred to as being which one of the following?
A. zero coupon
B. callable
C. senior
D. collateralized
E. unsecured

14. A $1,000 face value bond can be redeemed early at
the issuer’s discretion for $1,030, plus any accrued interest. The additional
$30 is called which one of the following?
A. dirty price
B. redemption value
C. call premium
D. original-issue discount
E. redemption discount

15. A deferred call provision is which one of the
following?
A. requirement that a bond issuer pay the current market price, plus
accrued interest, should the firm decide to call a bond
B. ability of a bond issuer to delay repaying a bond until after the
maturity date should the issuer so opt
C. prohibition placed on an issuer which prevents that issuer from ever
redeeming bonds prior to maturity
D. prohibition which prevents bond issuers from redeeming callable bonds
prior to a specified date
E. requirement that a bond issuer pay a call premium which is equal to or
greater than one year’s coupon should that issuer decide to call a bond

16. A call-protected bond is a bond that:
A. is guaranteed to be called.
B. can never be called.
C. is currently being called.
D. is callable at any time.
E. cannot be called during a certain period of time.

17. The items included in an indenture that limit
certain actions of the issuer in order to protect bondholder’s interests are
referred to as the:
A. trustee relationships.
B. bylaws.
C. legal bounds.
D. “plain vanilla” conditions.
E. protective covenants.

18. A bond that has only one payment, which occurs at
maturity, defines which one of the following?
A. debenture
B. callable
C. floating-rate
D. junk
E. zero coupon

19. Which one of the following is the price a dealer
will pay to purchase a bond?
A. call price
B. asked price
C. bid price
D. bid-ask spread
E. par value

20. You want to buy a
bond from a dealer. Which one of the following prices will you pay?
A. call price
B. auction price
C. bid price
D. asked price
E. bid-ask sprea

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