The Ultimate How Bonds Work Quiz
by Staff
Ever wonder how large companies raise capital when the bank won't loan them any more money? One of the most accepted ways of borrowing money in the financial world is to issue bonds. There are many different types of investment bonds, but our bond quiz will teach you everything you need to know and more.

When a business needs more money than a bank loan can provide, one solution is to issue:

  • bonds
  • stamps
  • magazines

Long-term bonds usually have _____ interest rate than short-term bonds.

  • a higher
  • a lower
  • a fairer

Interest payments on bonds are usually paid out:

  • annually or semiannually
  • quarterly or monthly
  • any of the above

When you buy stock in a company, you are actually buying:

  • partial ownership in a company
  • an investment in your future
  • a piece of paper

The interest rate on floating-rate bonds _____as a result of market conditions.

  • adjusts
  • fluctuates
  • either of the above

When you sell a bond at lower than its face value, you are selling it at:

  • a discount
  • a premium
  • an auction house

The United States government has issued bonds in the past to fund:

  • wars
  • government programs
  • both of the above

Treasury bonds take more than _____years to mature.

  • two
  • three
  • 10

Which of the following might be funded by municipal bonds?

  • a shopping mall
  • a movie theater
  • a hospital

What's the best way to determine if buying a corporate bond is financially risky?

  • Do some research on the issuing company's financial condition.
  • Ask a friend who works there .
  • Ask your lawyer.

Which of the following companies offer a rating service to help you determine a company's financial status?

  • IBM
  • Enron
  • Standard and Poor's

Which of the following ratings represents a low-risk bond?

  • AAA
  • C
  • D

_____ bonds are considered one of the riskiest types of bonds.

  • Municipal
  • Junk
  • U.S. government

What is the typical life of a bond?

  • one month to 20 years
  • one month to 50 years
  • one month to 100 years

The right to call in a bond before its date of maturity is called:

  • callability
  • irritability
  • feasibility

Which provision allows a buyer to sell back a bond before its maturity date?

  • put provision
  • keep provision
  • sell provision

Which type of bond can be converted into stock in the issuing company?

  • sedan bonds
  • coupe bonds
  • convertible bonds

Which type of bonds is backed by collateral?

  • confident bonds
  • unsecured bonds
  • secured bonds

Unsecured bonds are also called:

  • debentures
  • adventures
  • co-ventures

A business might issue bonds to raise money to:

  • fund operations
  • move into new markets
  • both of the above