12) If the face interest rate is less than the market rate, the bond will sell at:

A) Call price.

B) Face value.

C) A premium.

D) A discount.

13) A bond is issued at premium:

A) When a bond's stated interest rate is equal to the market interest rate.

B) When a bond's stated interest rate is less than the effective interest rate.

C) When a bond's stated interest rate is less than the market interest rate.

D) When a bond's stated interest rate is higher than the market interest rate.

14) The reason investors buy bonds is to:

A) Earn interest.

B) Own controlling interest in the company.

C) Exercise voting rights in a company.

D) Receive dividend payments.

15) The interest rate on which cash payments to bondholders are based is the:

A) Market rate.

B) Discount rate.

C) Stated rate.

D) Amortization rate.

16) When a bond is sold at a price higher than the face value, the difference is known as a:

A) premium.

B) Discount.

C) Maturity value.

D) Face value.

17) When a bond is sold at a price lower than the face value, the difference is known as a:

A) Premium.

B) Discount.

C) Maturity value.

D) Face value.

18) Unsecured bonds (or debenture bonds) are:

A) Issued on the basis of a corporation's general credit.

B) When the bonds mature on different dates.

C) Give the issuer the right to buy back and retire the bonds before maturity.

D) When all the bonds mature at the same time.