Series 6

Series 6 practice questions, page 10 of 13, with answer review and explanations.

Question 46

A long-term, unsecured bond issued by a corporation is called:

  1. a debenture.
  2. a general obligation bond.
  3. commercial paper.
  4. an industrial revenue bond.

Question 47

Which of the following is not a secured debt issue?

  1. a collateral trust receipt
  2. a subordinated debenture
  3. an equipment trust receipt
  4. a mortgage bond

Question 48

Steel Dynamics (STLD) has a convertible bond issue that matures in four years. The bond has a face value of $1,000 and pays a coupon of 5.125%, with interest paid semiannually. The conversion ratio is 56.9801. If the stock of Steel Dynamics is currently priced at $15 a share, what is the conversion value of this bond, to the nearest cent?

  1. $854.70
  2. $569.80
  3. $175.50
  4. Until it matures, the conversion value of the bond is equal to its face value of $1,000

Question 49

Which of the following relationships regarding shares of common stock are necessarily true? I. shares outstanding > issued shares II. authorized shares issued shares III. issued shares = treasury shares IV. issued shares shares outstanding

  1. I and II only
  2. II and IV only
  3. I, II, and III only
  4. II, III, and IV only

Question 50

Which of the following statements regarding zero-coupon bonds is true?

  1. An advantage of investing in zero -coupon bonds is that the bondholder does not receive interest income that he must pay taxes on each year and instead receives profits from the bond investment in the form of tax-preferred capital gain income when the bond matures.
  2. Only governments at the federal, state, or local levels, or government agencies are permitted to issue zero-coupon bonds.
  3. All else equal, zero-coupon bonds will have less price fluctuation when interest rates change.
  4. Although the bondholder receives no interim interest payments from his investment in zero -coupon bonds, the difference between the purchase price and the