Take this quiz to find out how much you know about the basics of bonds. Click the Next button to begin. 1. A bond is another name for: Fixed Income Investments 007 Cash Equivalents Equity Investments 2. True or False. When you own a bond that is issued by a company, you are considered to have "ownership" in the company. True False 3. Bonds can be issued by a number of different entities. Of the choices below, which would NOT typically issue bonds? Corporations Municipalities Individual Investors Federal Government None of the above - all of these entities issue bonds. 4. What is the common term used to describe a person who purchases a bond investment? Issuer Debtor Pessimist Creditor None of the above 5. When investors purchase bonds, they essentially: are acquiring an ownership stake in the issuing entity. are lending money to a corporation or other issuing entity, in return for interest payments and a return of principal at the end of the term. are trying to get somone out of jail. are expecting growth in their initial investment 6. Many investors today purchase bonds by investing in: Real Estate Certificates of Deposit Options Mutual Funds None of the above 7. True or False. Bonds with longer maturities tend to offer higher interest rates. True False 8. Which of the following statements about the risks involved with bond investing is TRUE? Generally, bonds have more risk than cash and stock investments. Generally, bonds have less risk than cash and stock investments. Generally, bonds have more risk than cash investments but less risk than stock investments. Bonds are guaranteed investments; there is no risk involved. 9. True or False. High quality bonds (those most likely to be repaid as promised) offer higher interest rates due to their stability. True False 10. Which of the following classifications are used to categorize bond investments? Credit quality - the ability of the entity to pay the bond back Maturity - the date when the bond needs to be paid back Coupon/interest rate - the amount the investor will receive as interest payments All of the above are used to categorize bond investments Click the Submit button to see your results. Time is Up! Time's up
