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correct answer for each question is indicated by a

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1 INCORRECT

Short-term debt matures within which one of the following time periods? A) B) C) D) six months one year eighteen months two years

five years E) Feedback: Short-term debt matures in one year or less. Review section 20.1.

2 INCORRECT

Funded debt is a term generally used to define which kind of debt? A) B) C) D) collateralized mortgage unsecured long-term

short-term E) Feedback: Funded debt is long-term debt. Review section 20.1.

3 INCORRECT

A $1,000 face value bond matures in 15 years, has an annual coupon of 6.6 percent, and an offer price of 98.25. What is the annual interest payment? A) B) C) D) $64.85 $65.50 $66.00 $67.18

$67.50 E) Feedback: The coupon rate applies to the face value. Review section 20.1.

4 INCORRECT

A bond has a face value of $1,000 and an offer price of 101.625. What is the current market price of this bond if the coupon rate is 7.5 percent? A) B) $984.01 $992.50 $1,000.00

Review section 10. approval of the issue by the board of directors II. can be called at a discount. and IV only I. SEC registration A) B) C) D) I and IV only II and III only I. the bond can be called at any time. cannot be called unless the bondholder is agreeable. and III only I. III. 5 INCORRECT If a bond is callable but has no deferred call provision then the bond: A) B) C) D) cannot be called. Review section 20. direct placement with a financial institution III.2.1. 7 INCORRECT What is the document which contains the agreement between the bond issuer and a trust company called? A) B) C) D) issue statement bond covenant collateral statement mortgage deed indenture E) Feedback: The agreement between a bond issuer and a trust company is . 20-day waiting period IV.018.75 E) Feedback: The offer price is stated as a percentage of face value. and IV E) Feedback: Option III also applies. II. II. 6 INCORRECT Which of the following are included in the issuance of publicly traded bonds? I. III.1.C) D) $1.25 $1. E) Feedback: Without a deferred call provision. Review section 20. can be called but only at a premium.016. can be called at any time.

and IV E) Feedback: A description of the property pledged as security is also included in the indenture. represent bondholders if the issuer defaults on any payments II. 8 INCORRECT A trust company that signs an indenture agreement with a bond issuer is obligated to do which of the following? I. III.2. Review section 20. III. sinking fund arrangements A) B) C) D) I and IV only II and III only I and II only I. 9 INCORRECT Which of the following are commonly found in a bond indenture agreement? I. protective covenants II. manage the sinking fund. represent the best interests of the bond issuer A) B) C) D) I and II only III and IV only I. Review section 20. description of property pledged as security III. II. names of the original bondholders IV. if applicable IV. and IV only II and III only E) Feedback: Option III is also correct. II.2. Review section 20. and III only II. ensure the terms of the indenture agreement are followed III. and IV only I. II. 10 INCORRECT Which one of the following bond values changes over time? A) B) C) D) E) par value denomination face value principal value market value .2.called an indenture.