Chapter 19

Question 1

the date when a bond will be repaid

Answer 1

maturity date

Question 2

the dollar amount that a bondholder will receive at a bond’s maturity

Answer 2

face value

Question 3

a bond that is backed only by the reputation of the issuing corporation, rather than by its asset

Answer 3

debenture

Question 4

A bonds that is backed by the assets of a corporation

Answer 4

mortgage bond

Question 5

Bonds that an investor can trade for shares of common stock

Answer 5

convertible bond

Question 6

a fund in which the corporation makes deposits for the purpose of paying back a bond issue

Answer 6

sinking fund

Question 7

bonds issued at the same time but which mature on different dates

Answer 7

serial bonds

Question 8

bond registered in the owner’s name by the company that issues the bond

Answer 8

registered bond

Question 9

bond that is registered in the owner’s name for only the face value and not for interest

Answer 9

coupon bond

Question 10

bond that is not registered in the investor’s name

Answer 10

bearer bond

Question 11

bond that does not produce interest payments

Answer 11

zero-coupon bond

Question 12

security issued by a state or local government to pay for its ongoing activities

Answer 12

municipal bond

Question 13

bonds that are issued by financially stable companies or municipalities

Answer 13

investment grade bond

Question 14

rate of return, usually stated as a percentage, earned by an investor who holds a bond for a certain period of time

Answer 14

yield

Question 15

a mutual fund with a fixed number of shares that are issued by an investment company when the fund is first organized

Answer 15

closed-end fund

Question 16

fund that invests in stocks or other securities contained in a specific stock or securities index

Answer 16

exchange traded fund

Question 17

is a mutual fund with an unlimited number of shares that are issued and redeemed by an investment company at the investors request

Answer 17

open end fund

Question 18

amount that one share of a mutual fund is worth

Answer 18

net asset value (nav)

Question 19

mutual fund for which is pay a commission every time you buy or sell shares

Answer 19

load fund

Question 20

mutual fund that has no commission fee

Answer 20

no load fund

Question 21

the earnings a fund pays to shareholders

Answer 21

income dividends

Question 22

additional amount above the face value of the bond

Answer 22

premium

Question 23

large urban area

Answer 23

metropolian

Question 24

riskier

Answer 24

speculative

Question 25

made up for

Answer 25

compensated

Question 26

legally owned security

Answer 26

holding

Question 27

completely used up

Answer 27

exhausted

Question 28

“sell off” a certain number of shares each investment period

Answer 28

liquidate

Question 29

A state or local government issues ____ to pay for ongoing activities.

Answer 29

municipal bonds

Question 30

Potential investors can find detailed information about a particular mutual fund in a report called a(n) ____

Answer 30

prospectus

Question 31

Companies or municipalities with good financial stability issue ____

Answer 31

investment grade bonds.

Question 32

A(n) _____ is repaid from the income generated by the project it is designed to finance.

Answer 32

revenue bond

Question 33

The assets of a corporation are used to back a(n) _____

Answer 33

mortgage bond.

Question 34

The amount one mutual fund share is worth is called its ______

Answer 34

Net Asset Value (NAV).

Question 35

The individual investor pays no commission for investing in a(n) _____

Answer 35

no-load fund.

Question 36

_____ are issued at the same time but mature on different dates.

Answer 36

Serial bonds

Question 37

Payments made to shareholders that result from the sale of securities in a funds portfolio are ______

Answer 37

capital gain distributions.

Question 38

A(n) ______ has a fixed number of shares that are issues by an investment company when the fund is first organized.

Answer 38

closed-end fund

Question 39

The face value of a bond is the amount a bondholder... Pays for the bond Receives at maturity Receives in interest Loses if the corporation fails

Answer 39

receives at maturity

Question 40

Assets of a corporation may be sold to repay a... Mortgage bond Debenture Convertible bond Bond indenture

Answer 40

mortgage bond

Question 41

An additional amount that a company pays above the value of its bond is called... Sinking fund Coupon Premium Interest check

Answer 41

premium

Question 42

Only the bond owner can collect interest from a... Registered bond Registered coupon bond Bearer bond Zero-Coupon bond

Answer 42

registered bond

Question 43

Which investment offers the highest rate of interest? Treasury bill Treasury bond Series EE Savings bond Agency bond

Answer 43

agency bond

Question 44

Municipal bonds are offered by all the following levels of government except... Federal State County City

Answer 44

federal

Question 45

The lowest Standart & Poor’s rating a bond can have and still be considered investment grade is... B BB BBB C

Answer 45

BBB

Question 46

How do you find the current yield of a bond? Divide the bonds current market value by the amount of annual interest income Divide the amount of annual interest income by the bonds current market value multiply the face value times the annual rate of interest Multiply the face value times the rate of return

Answer 46

Divide the amount of annual interest income by the bond's current market value

Question 47

A back-end load on a mutual fund is charged for... Each purchase of shares Managing the mutual fund Markting and advertising the fund Withdrawing money from the fund

Answer 47

withdrawing money from the fund

Question 48

Investors pay penalty fees if they fail to make regular purchases of shares when investing in a mutual fund under a... regular account transaction Voluntary savings plan Contractual savings plan Reinvestment plan

Answer 48

contractual savings plan