Chapter 15 Investing in Bonds

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CHAPTER 15 Investing in Bonds

|CHAPTER 15 QUIZ |

TRUE-FALSE

| |A bond debenture is a legal document that details all of the conditions relating to a bond issue. |
| |One reason corporations sell corporate bonds is to help finance their ongoing business activities. |
| |A mortgage bond is sometimes referred to as a secured bond. |
| |A sinking fund is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue. |
| |A revenue bond is a bond backed by the full faith, credit, and unlimited taxing power
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F (p. 483) |6. A (p. 494) |
|2. T (p. 484) |7. D (p. 497) |
|3. T (p. 485) |8. B (p. 502) |
|4. T (p. 486) |9. B (p. 492) |
|5. F (p. 496) |10. D (p. 489) |

CONCEPT QUESTIONS

Concept Check 15-1 (p. 484)

1. What is the usual face value for a corporate bond?

The usual face value of a corporate bond is $1,000, although the face value of some corporate bonds may be as high as $50,000. (p. 483)

2. In your own words, define maturity date and bond indenture.

The maturity date for a corporate bond is the date on which the corporation is to repay the borrowed money.

A bond indenture is a

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