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SEC 3.2

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5 Questions

  1. The Alta Loma High School District is asking voters to approve a bond to fund the purchase of new computers and software. The bond will mature in 40 years, and the interest and principal payments will be funded from real estate taxes. This is an example of A. a GO bond B. a revenue bond C. a debenture D. an equipment trust bond

a GO bond

  1. Your customer is in the 30% federal tax bracket. He is considering purchasing a 7% corporate bond. The after-tax yield would be A. 4.9% B. 2.1% C. 10% D. 7%

4.9%

  1. A newly issued Treasury security that matures in five years is A. a T-bill B. a T-note C. a T-bond D. a Treasury receipt

a T-note

  1. CMOs are backed by A. mortgages B. real estate C. municipal taxes D. the full faith and credit of the U.S. government

mortgages

  1. All of the following would most likely be found in a money market fund's portfolio except A. T-bills B. T-bonds with less than one year to maturity C. negotiable CDs D. common stock

common stock

Test your knowledge on different types of bonds and their characteristics. Identify the type of bond based on the given scenario. In this case, determine the specific type of bond used to finance the purchase of new computers and software in a high school district.

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