Question 1

The market price of preferred stock is inversely related to the market rates of interest.

Accepted Answer

A) True 
 B)False

Question 2

Any bond that is backed by the pledge of collateral is known as what type of bond?

Accepted Answer

A)  Collateralized
B)  Secured
C)  Recalled
D)  Sinking
E)  AgencyF) A) and D)
G) A) and C)

Question 3

A corporation that issues preferred stock will mostly likely call the stock when the market rates of interest increase.

Accepted Answer

A) True 
 B)False

Question 4

A bond is selling at par value of $1,000 with 10 years to maturity and pays an 8% coupon rate annually.What is the YTM?

Accepted Answer

A)  6%
B)  10%
C)  8%
D)  9.1%E) A) and B)
F) A) and C)

Question 5

There is an inverse relationship between interest rates and bond values.

Accepted Answer

A) True 
 B)False

Question 6

A corporate bond with a face value of $1,000 is currently selling at par,and pays an 8% yield to maturity.Which of the following statements concerning this bond is true?

Accepted Answer

A)  Its current market price is $1,000.
B)  Its current semi-annual coupon payment is $40.
C)  Its current yield is 8%.
D)  All of the above are correct.
E)  Only B and C are correct.F) A) and B)
G) D) and E)

Question 7

If an asset doesn't earn a return,its value is determined by supply and demand.

Accepted Answer

A) True 
 B)False

Question 8

Why are the tax implications of investing in bonds more involved than the tax implications of investing in common stock?

Accepted Answer

Common stock is pretty straight forward when it comes to paying taxes on their returns.With stock,you either have a capital gain or loss and possibly dividend income,both of which are obviously taxable sources of income.With the many different types of bonds,some are taxable bonds and,similar to stocks,you either have a capital gain or loss and interest income,all of which are obviously taxable.However,with U.S.Treasuries,their may be tax liabilities on certain sources of income,either capital gains or rate adjustments with TIPS.Municipal bonds are similar except it also depends on where you live and what State issued the bonds.There may not be a Federal tax liability but there may be different State tax liabilities.

Question 9

Bonds reduce risk through diversification.

Accepted Answer

A) True 
 B)False

Question 10

Brittany has learned in her research that ________ are issued by the FNMA and the FHLB.

Accepted Answer

A)  pass-through certificates
B)  agency bonds
C)  treasury bonds
D)  treasury inflation-indexed bondsE) None of the above
F) C) and D)

Question 11

Collectibles such as baseball cards and beanie babies can be fun,but one should not expect them to provide for your financial future.

Accepted Answer

A) True 
 B)False  True

Question 12

In comparing municipal bonds to other taxable bonds,the comparison must be between equivalent taxable yields.

Accepted Answer

A) True 
 B)False  True

Question 13

The long-term bond you own was issued by IBM Corporation and used no collateral.This is an example of a(n)

Accepted Answer

A)  unsecured mortgage.
B)  credit.
C)  debenture.
D)  nomenclature.
E)  none of the above.F) None of the above
G) C) and E)

Question 14

A secured bond is one that is backed by collateral.

Accepted Answer

A) True 
 B)False

Question 15

Pedro is trying to take advantage of the bond valuation relationships.He has figured out that when you expect interest rates to go up,buy ________ bonds and when you expect interest rates to go down,buy ________.

Accepted Answer

A)  government bonds;short-term bonds
B)  interest-indexed bonds;long-term bonds
C)  very long-term;bonds with very short-term maturities that are not callable
D)  very short-term;bonds with very long-term maturities that are not callable
E)  interest-proof;long-term bondsF) B) and D)
G) D) and E)

Question 16

A real estate investment that is most similar to a mutual fund specializing in real estate investment is called a

Accepted Answer

A)  real estate agency bond.
B)  pass-through property bond.
C)  property trust.
D)  real estate investment trust.
E)  none of the above.F) D) and E)
G) A) and E)

Question 17

When interest rates rise,bond values drop,and when interest rates drop,bond values rise.Using this inverse relationship,develop a two-part strategy for the bond investor.

Accepted Answer

When an investor expects inter...

Question 18

According to the Morgan Stanley REIT Index,REITs fell by about ________ between March 2007 and March 2009.Then between March 2009 and March 2017,the Morgan Stanley REIT Index rose by more than two and a half times,but REITs were still down ________ from their 2007 high.

Accepted Answer

A)  15 percent;45 percent
B)  50 percent;50 percent
C)  75 percent;30 percent
D)  95 percent;5 percentE) None of the above
F) All of the above

Question 19

Michael Milkman has suggested that you consider the purchase of some bonds that are rated BB or below.He is asking you to purchase ________ bonds.

Accepted Answer

A)  junk
B)  very risky
C)  high-yield
D)  All of the above
E)  Only A and B.F) A) and C)
G) A) and B)

Question 20

What,if any,are the pros and cons of speculating in precious metals,precious gems,and collectibles?

Accepted Answer

When timed correctly,these speculations ...

Exam 13: Investing in Bonds and Other Alternatives

The market price of preferred stock is inversely related to the market rates of interest.

Correct Answer
verified

Any bond that is backed by the pledge of collateral is known as what type of bond?

Correct Answer
verified

A corporation that issues preferred stock will mostly likely call the stock when the market rates of interest increase.

Correct Answer
verified

A bond is selling at par value of $1,000 with 10 years to maturity and pays an 8% coupon rate annually.What is the YTM?

Correct Answer
verified

There is an inverse relationship between interest rates and bond values.

Correct Answer
verified

A corporate bond with a face value of $1,000 is currently selling at par,and pays an 8% yield to maturity.Which of the following statements concerning this bond is true?

Correct Answer
verified

If an asset doesn't earn a return,its value is determined by supply and demand.

Correct Answer
verified

Why are the tax implications of investing in bonds more involved than the tax implications of investing in common stock?

Bonds reduce risk through diversification.

Correct Answer
verified

Brittany has learned in her research that ________ are issued by the FNMA and the FHLB.

Correct Answer
verified

Collectibles such as baseball cards and beanie babies can be fun,but one should not expect them to provide for your financial future.

Correct Answer
verified
True

In comparing municipal bonds to other taxable bonds,the comparison must be between equivalent taxable yields.

Correct Answer
verified
True

The long-term bond you own was issued by IBM Corporation and used no collateral.This is an example of a(n)

Correct Answer
verified

A secured bond is one that is backed by collateral.

Correct Answer
verified

Pedro is trying to take advantage of the bond valuation relationships.He has figured out that when you expect interest rates to go up,buy bonds and when you expect interest rates to go down,buy .

Correct Answer
verified

A real estate investment that is most similar to a mutual fund specializing in real estate investment is called a

Correct Answer
verified

When interest rates rise,bond values drop,and when interest rates drop,bond values rise.Using this inverse relationship,develop a two-part strategy for the bond investor.

Correct Answer
verified
When an investor expects inter...
View Answer

According to the Morgan Stanley REIT Index,REITs fell by about between March 2007 and March 2009.Then between March 2009 and March 2017,the Morgan Stanley REIT Index rose by more than two and a half times,but REITs were still down from their 2007 high.

Correct Answer
verified

Michael Milkman has suggested that you consider the purchase of some bonds that are rated BB or below.He is asking you to purchase ________ bonds.

Correct Answer
verified

What,if any,are the pros and cons of speculating in precious metals,precious gems,and collectibles?

Correct Answer
verified
When timed correctly,these speculations ...
View Answer

Exam 13: Investing in Bonds and Other Alternatives

The market price of preferred stock is inversely related to the market rates of interest.

Correct AnswerverifiedShow Answer

Any bond that is backed by the pledge of collateral is known as what type of bond?

Correct AnswerverifiedShow Answer

A corporation that issues preferred stock will mostly likely call the stock when the market rates of interest increase.

Correct AnswerverifiedShow Answer

A bond is selling at par value of $1,000 with 10 years to maturity and pays an 8% coupon rate annually.What is the YTM?

Correct AnswerverifiedShow Answer

There is an inverse relationship between interest rates and bond values.

Correct AnswerverifiedShow Answer

A corporate bond with a face value of $1,000 is currently selling at par,and pays an 8% yield to maturity.Which of the following statements concerning this bond is true?

Correct AnswerverifiedShow Answer

If an asset doesn't earn a return,its value is determined by supply and demand.

Correct AnswerverifiedShow Answer

Why are the tax implications of investing in bonds more involved than the tax implications of investing in common stock?

Bonds reduce risk through diversification.

Correct AnswerverifiedShow Answer

Brittany has learned in her research that ________ are issued by the FNMA and the FHLB.

Correct AnswerverifiedShow Answer

Collectibles such as baseball cards and beanie babies can be fun,but one should not expect them to provide for your financial future.

Correct AnswerverifiedTrue

In comparing municipal bonds to other taxable bonds,the comparison must be between equivalent taxable yields.

Correct AnswerverifiedTrue

The long-term bond you own was issued by IBM Corporation and used no collateral.This is an example of a(n)

Correct AnswerverifiedShow Answer

A secured bond is one that is backed by collateral.

Correct AnswerverifiedShow Answer

Pedro is trying to take advantage of the bond valuation relationships.He has figured out that when you expect interest rates to go up,buy ________ bonds and when you expect interest rates to go down,buy ________.

Correct AnswerverifiedShow Answer

A real estate investment that is most similar to a mutual fund specializing in real estate investment is called a

Correct AnswerverifiedShow Answer

When interest rates rise,bond values drop,and when interest rates drop,bond values rise.Using this inverse relationship,develop a two-part strategy for the bond investor.

Correct AnswerverifiedWhen an investor expects inter...View AnswerShow Answer

According to the Morgan Stanley REIT Index,REITs fell by about ________ between March 2007 and March 2009.Then between March 2009 and March 2017,the Morgan Stanley REIT Index rose by more than two and a half times,but REITs were still down ________ from their 2007 high.

Correct AnswerverifiedShow Answer

Michael Milkman has suggested that you consider the purchase of some bonds that are rated BB or below.He is asking you to purchase ________ bonds.

Correct AnswerverifiedShow Answer

What,if any,are the pros and cons of speculating in precious metals,precious gems,and collectibles?

Correct AnswerverifiedWhen timed correctly,these speculations ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Pedro is trying to take advantage of the bond valuation relationships.He has figured out that when you expect interest rates to go up,buy bonds and when you expect interest rates to go down,buy .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When an investor expects inter...
View Answer

According to the Morgan Stanley REIT Index,REITs fell by about between March 2007 and March 2009.Then between March 2009 and March 2017,the Morgan Stanley REIT Index rose by more than two and a half times,but REITs were still down from their 2007 high.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When timed correctly,these speculations ...
View Answer