Marie purchased a 6%, $10,000 bond at 98.2. If she holds her bond until the maturity date, what will her total final yield consist of?

• Capital gains only
• Interest income and a capital loss
• Interest income only
• Interest income and a capital gain

Sarifa is considering investing in an 8%, $1,000 par value, 5-year Government of Canada bond (actually, a debenture). Assume a discount rate of 6% and semi-annual coupon payments. How much should Sarifa pay for this bond?

• Not pay more than $1,000
• Not pay more than $1,060
• Not pay more than $1.084.25
• Not pay more than $1,085.30

If you have a 5-year investment horizon and expect inflation to rise each year, what type of government issued security would you consider a good investment choice?

• Treasury Bills
• Collateral Trust Bonds
• Real Return Bonds
• Regular Marketable Bonds

If the "Ontario 10% 15 May 28" is currently quoted at a price of $9,500, but it has a $10,000 par value, this would mean that ...

• An investor would pay $950, minus any accrued interest, for the bond
• An investor would pay $1000, plus any accrued interest, for the bond
• The bond is trading at a premium
• The bond is trading at a discount

Assuming a current discount rate of 9% and semi-annual coupons, what is the "present value" of the first coupon of an 8%, 5 year, bond with a $100 par value?

• 2.58%
• 3.38%
• 3.83%
• 7.34%

Which of the following statements about long-term debt is NOT correct?

• Bonds are usually secured by real assets
• Subordinated debentures rank behind some other long-term debt security
• An equipment trust certificate pledges operating equipment as financial security
• Corporate notes rank ahead of all other fixed-interest securities of a borrower

Which of the following types of corporate bonds is secured by physical property?

• Preferred security
• Mortgage bond
• Corporate note
• Collateral Trust bond

What type of company would issue a collateral trust bond?

• A holding company that does not have fixed assets but owns securities of subsidiaries
• A company which has already issued significant amounts of other types of bonds and debentures
• A junior company with a low credit rating
• A real estate development company that owns office buildings

Graciela learns the "Ontario 10% 15 May 28" is rated as a "AA" (medium risk) fixed income security. However, news also becomes public that the Ontario government is more in debt than previously realized and the "Ontario 10% 15 May 28" is downgraded to "BB" status (increased risk). What impact is this action likely to have?

• The coupon rate on the bond will rise
• The price of the bond will rise
• The yield on the bond will fall
• The price of the bond will fall

Bonnie purchased a 5%, $10,000 bond at a price of 98, with two years remaining until maturity. What is the approximate yield to maturity on her bond?

• 5.0000%
• 6.0606%
• 7.0408%
• 6.0923%

A "strip bond" is a bond which an investment dealer has separated the coupon payments from the principal repayment. The dealer can then sell the coupon payments and principal independently to different investors. If an investor buys only the coupon payments, which of the following is their investment objective?

• The investor does not require income until after the bond matures
• The investor wants to have their principal repaid in installments over time
• The investor requires a steady stream of income
• The investor is seeking a lower quality bond with a higher yield

What is the current yield on a "Canada 6.50% 1 June 17" bond with a "face value" of $100 and the current market price is $101.21?

• 7.71%
• 1.21%
• 6.42%
• 6.50%