Chapter 6

Question 1

long-term debt obligations issued by corporations and government units.

Answer 1

bonds

Question 2

fixed-income instrument that represents a loan by an investor to a borrower

Answer 2

bonds

Question 3

market in which bonds are issued and traded

Answer 3

bond market

Question 4

classified as treasury notes or bonds, municipal bonds and corporate bonds

Answer 4

bond markets

Question 5

issued by the Bureau of Treasury to finance expenditures for public services

Answer 5

treasury notes and bonds

Question 6

backed by the government hence default risk free

Answer 6

treasury notes and bonds

Question 7

issued by state or local government units to cover budget deficits or finance public services

Answer 7

municipal bonds

Question 8

can be general obligation bonds and revenue bonds

Answer 8

municipal bonds

Question 9

are bonds backed by the full faith and credit of the issuer (i.e. LGU)

Answer 9

general obligation bonds

Question 10

sold to finance a specific revenue generating project, backed by cash flows from the project (i.e. extension on a highway)

Answer 10

revenue bonds

Question 11

are issued by corporations to finance expansion projects (i.e. new factories or branches)

Answer 11

corporate bonds

Question 12

legal contract that specifies the rights and obligations of the bond issuer or bond holder

Answer 12

bond indenture

Question 13

bonds with coupons attached to the bond, the holder presents the coupons to the issuer for payments of interest when they come due

Answer 13

bearer bonds

Question 14

bonds in which the owner is recorded by the issuer and coupon payments are given to the registered owner

Answer 14

registered bond

Question 15

are bonds in which the entire issue matures on a single date

Answer 15

term bonds

Question 16

bonds that mature on a series of dates, with a portion of the issue paid off on each

Answer 16

serial bonds

Question 17

bonds issued to finance specific projects, which are pledged as collateral for the bond issue

Answer 17

mortgage bonds

Question 18

backed solely on the general credit worthiness of the issuing firm, unsecured by a specific asset

Answer 18

debentures

Question 19

are unsecured bonds that are junior in their rights to mortgage bonds and regular debentures

Answer 19

subordinated debentures

Question 20

may be exchanged for another security of the issuing firm at the discretion of the bondholder

Answer 20

convertible bonds