12 - 12 Student 1 Assume that you purchase a $1,000...

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12 Student: ___________________________________________________________________________ 1. Assume that you purchase a $1,000 corporate bond that pays 10-3/4 percent interest. What is the amount of interest that you receive each year? A. $1,000 B. $107.50 C. $100 D. $10 E. $10.75 2. Assume that you purchased a $1,000 Mobil Corporation bond that pays 8.25 percent interest. What is the amount of interest you would receive each six months? 3. Generally, interest on corporate bonds is paid every 4. Melanie Nash owns one $1,000 corporate bond issued by Chevron. The bond pays 6.5 percent. If interest is paid semiannually, what is the amount of the cheque that Ms. Nash will receive at the end of each six- month period? 5. The legal conditions for a corporate bond are described in the: A. bond indenture. B. bondholder's covenant. C. corporate charter. D. trustee contract. E. bond debenture. 6. The financially independent firm or individual that acts as the bondholders' representative is the: 7. Which of the following statements is correct?
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8. A bond that is backed only by the reputation of the issuing corporation is called a(n) ____________ bond. 9. A corporate bond that is secured by various assets of the issuing firm is called a(n) ____________ bond. A. debenture B. indenture C. mortgage D. preemptive E. treasury 10. A bond that is unsecured is called a(n) 11. A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders, with respect to both income and assets is called a(n): 12. A bond that can be exchanged, at the owner's option, for a specified number of shares of the corporation's stock is called a(n) ____________ bond. 13. Sarah Peterson has been thinking about investing in corporate bonds. She is concerned about safety and wants the most secure bond investment possible. She would most likely invest in ____________ bonds. A. debenture B. subordinated. C. indenture D. convertible E. mortgage
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