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Bonds Flashcards | StudBud
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Bonds
Bonds
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an #economics quiz! to introduce the basics of bonds
Flashcards
15 cards
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Practice quiz
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Questions
15
Answers
1
What are the safest bonds?
Corporate
State
Treasury
Municipal
2
The interest rate on the bond is called its ___ rate.
interest
dividend
coupon
par
3
How does increased interest rates on T-notes affect the US?
Government programs may have to be cut to pay interest on the debt.
It will cost the government more money to borrow.
GDP growth may be lower in the long term.
Citizens will have to pay higher taxes
4
Excessive US Government debt will eventually cause what to happen to coupon rates on future T-notes?
goes up.
stays the same.
goes down.
5
A 10 year $1,000 T-note with 2% coupon yields ___ in interest AND principal over 10 yrs.
$1200
$200
$1000
$20
6
The cost to buy the bond is called its _____.
coupon
face value
dividend
gross cost
7
Rank the risk of types of bonds from MOST to LEAST risky.
State, Municipal, Treasury, Corporate
Treasury, State, Municipal, Corporate
Municipal, Corporate, State, Treasury
Corporate, Municipal, State, Treasury
8
The riskier the investment, the higher the ____ on the bond.
return
coupon
principal
ROI
9
A 10 year $1,000 T-note with 2% coupon yields ____ in interest over 10 years.
$20
$2
$200
$1000
10
The real (adjusted for inflation) coupon rate for US Treasury bonds is now negative, meaning what?
The US is not making any money on its bonds.
investors are in effect paying the US Treasury to take their money
11
Why are the coupon rates on US Treasury bonds so low right now?
Investors from around the world see US Treasuries as a safe investment
Demand is extremely high due to uncertainty around COVID-19.
Low demand=lower coupon rate
Investors don't want to invest in stocks, real estate, or corporate bonds.
12
A 10 year $1,000 T-note with 2% coupon yields ____ per year.
$2
$20
$200
$1000
13
Bonds are generally safer investments than stocks.
False
True
14
How will the US Government pay for the expenses in fighting COVID-19?
State
Corporate
Municipal
Treasury
15
If the US issues bonds to pay for COVID-19, what happens to its taxes and debt?
Debt goes up, taxes go down.
Debt goes down, taxes go up.
Debt and taxes go down.
Debt goes up, taxes go up.
