Unit 2 (Quiz 2)

A company reorganizing with the intent to emerge from a bankruptcy is likely to issue which of the following type of bonds to accomplish that goal? A. Adjustable bonds B. Subordinated debt C. Debentures D. Mortgage bonds

A. Adjustable bonds

Which of the following regarding federal funds is true? A. these funds may be loaned from one Federal Reserve Board (FRB) member bank to another B. these funds can provide intermediate-term loans for Federal Reserve Board (FRB) members C. these funds are the amount required to be held on reserve at the Federal Reserve Board (FRB) D. these funds can provide long-term loans for Federal Reserve Board (FRB) members

A. These funds may be loaned from one Federal Reserve Board (FRB) member bank to another

An investor holding T-bonds will receive interest payments A. annually B. semiannually C. biennially D. Monthly

B. Semiannually

T-bills are delivered in A. physical certificates B. book entry C. registered as to principal only form D. bearer form

B. book entry

A court has ordered a corporation to liquidate all assets under a federal bankruptcy proceeding. Which of the following is TRUE? A. there is no priority for the payment of wages to employees B. debtholders are paid before stockholders C. Preferred stockholders are paid before debtholders D. Common stockholders are paid before preferred stockholder

B. debtholders are paid before stockholder

An investor pays $102 ($1,020) for a $1,000 par value bond. At maturity, A. the discount received increases the return B. the premium paid decreases the return C. the premium paid increases the return D. the discount received decreases the return

B. the premium paid decreases the return

What interest rates in the marketplace at 7%, it could be expected that in the secondary market, a bond carrying a 5% coupon trade A. upward in price B. unaffected by the changing interest rates C. downward in price D. only in accordance to supply and demand

C. downward in price

Which of the following is an unsecured debt instrument? A. collateral trust certificates B. Junior lien mortgage bonds C. Equipment trust certificates D. Aaa/AAA-rated debentures

D. Aaa/AAA-rated debentures

In what order would claimants receive payment in the event of a corporate bankruptcy? I. Holders of secured debt II. Holders of subordinated debt instruments III. General creditors IV. Preferred stockholders A. I, II, III, IV B. III, I, II, IV C. IV, I, II, III D. I, III, II, IV

D. I, III, II, IV

U.S. government deposits securities with a trustee against which certificates are sold representing principal only with no regular interest payments. These are known as A. Treasury receipts B. Treasury notes C. Treasury bonds D. Treasury STRIPS

D. Treasury STRIPS