6. The date on which a bond contract ends and the stated amount of the final payment (as spelled out in the bond's Indenture) is made to bondholders is known as what?

Multiple Choice

• Redemption.

• Maturity.

• Par Value.

• Coupon.

• Yield.

7. Which of the following is NOT a benefit of issuing stock rather than bonds?

Multiple Choice

• It's often easier to sell stock than bonds as many investors find owning a piece of a company more attractive than simply loaning money to it.

• All else equal, investors in stock tend to require less of a return for buying stock than they do for buying bonds.

• Unlike with bondholders, a company has no obligation to make payments to shareholders.

• Issuing stock tends to have a more favorable effect on liquidity than issuing bonds.

8. Which of the following is True about bonds?

Multiple Choice

• Bondholders have an equal vote as shareholders when it comes to voting on important company matters.

• Coupon payments may legally be withheld from being made to bondholders at the discretion of the Board of Directors.

• Owning a bond does not give the bondholder an ownership stake in the company.

• Following a liquidation, bondholders are behind stockholders in line to receive assets.

• Bonds do not trade on the Secondary Market as stocks do.

9. Which of the following is the most likely reason an institution would be barred from owning non-Investment Grade bonds in certain investment accounts?

Multiple Choice

• Because the institution relies on a fairly reliable stream of income from the account and cannot take on too much risk.

• Because non-Investment Grade bonds tend to have lower Coupon Rates than Investment Grade bonds.

• Because Investment Grade bonds tend to be riskier than non-Investment Grade bonds.

• Because there are not enough non-Investment Grade bonds on the market to meet the needs of most large institutions.

10. Which of the following is true about Preferred stock?

Multiple Choice

• It's "preferred" by most investors because investors usually make more money by buying preferred stock than they do by buying common stock.

• Preferred stock carries more overall rights than common stock.

• Preferred stock can only be purchased by investors who meet certain wealth criteria.

• More analysts cover Preferred stock than common stock.

• Preferred stockholders are ahead of common stockholders in receiving assets following a liquidation.

11. Which of the following best define "Pre-emptive Rights"?

Multiple Choice

• Shareholders have the right to "preempt" bad decisions made by upper management before they are made.

• Shareholders are allowed to have someone else vote their shares for them at shareholders' meetings.

• Shareholders have the right to purchase enough shares of a new issue of stock to maintain their current percentage ownership of the company.

• Shareholders can block the nomination of a person to the Board of Directors before the vote takes place.

• Shareholders can block, or preempt, the issuance of a new series of bonds to prevent the company from getting into debt trouble.