P1 Finance Quiz #4 Corporate Bonds and Mutual Funds

Why do mortgage bonds usually earn less interest than debentures?

• They are safer investments

• They are riskier investments

• They have higher interest rates

• They are not backed by assets

What is the interest rate of the bonds you bought in the 'YOU FIGURE' section?

• 4.5%

• 5.5%

• 7%

• 8%

How many people own savings bonds according to the text?

• Over 10 million

• Over 25 million

• Over 55 million

• Over 100 million

What backs U.S. government securities?

• Gold reserves

• The full faith and credit of the U.S. government

• Real estate holdings

• Foreign investments

What is a characteristic of U.S. government securities?

• High risk of default

• Almost risk-free

• High interest rates

• Unregulated

What type of bonds are Series I Savings Bonds?

• Fixed-rate bonds

• Inflation-indexed bonds

• Zero-coupon bonds

• Convertible bonds

How can you buy municipal bonds?

• Only through a stock exchange

• Directly from the government or through an account executive

• Only from private sellers

• Only from international markets

What is the risk associated with municipal bonds?

• They are always risky

• They are relatively safe but can default

• They are guaranteed to make a profit

• They are illegal

Who issues municipal bonds?

• Corporations

• State or local governments

• Federal government

• Private individuals

Why might the government or a company decide to issue bonds?

• To increase stock prices

• To raise capital for projects

• To decrease interest rates

• To reduce taxes