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Which of the following is NOT true with regard to a forced conversion clause?

a) It is an advantage to the issuing company rather than to the lender

b) The conversion price offered is lower than the level at which the convertible debt is

trading

c) It is more of an advantage to the lender than to the issuing company

d) The conversion would take place due to the rise in the price of the common stock of a

company

36) When the issuer sets aside a stipulated amount each year to retire most or all of a debt

issue by maturity, this is called a(n):

a) Sinking fund

b) Conversion fund

c) Purchase fund

d) Retraction fund

37) The debt security feature that provides for the retiring of the debt by buying the

securities in the market prior to maturity, only when it is to the companys advantage, is

called a(n) _________ feature.

a) Sinking fund

b) Callable

c) Purchase fund

d) Installment

38) Which of the following statement is FALSE?

a) Treasury bills are short-term government obligations

b) Canada Savings Bonds can be cashed by the owner at any bank in Canada at any time

c) Treasury bills pays annual interest based on current market conditions

d) Canada Savings Bonds are available in numerous types, such as; regular interest bonds

and Canada premium Bonds

39) What do you call a security that can be changed to another security, usually common

shares?

a) Reversible

b) Convertible

c) Changeable

d) Open-end

40) The yield of a bond is different from its coupon. Given yield and coupon rate, which

of the following relationships is false?

a) Bonds trade at a discount when yields are greater than coupon rates

b) Bonds trade at par when yields equal coupon rates

c) Bonds trade at a premium when yields are less than coupon rates

d) A one-year, $1000 BCE bond with a 5% coupon, bought at 95, trades at par

41) The current value of future cash flows is known as its:

a) Discount rate

b) Compound interest rate

c) Present value

d) Capital gain or loss

42) The calculation which reflects coupon rate and tern to maturity together is known as:

a) Term to maturity

b) Duration

c) Yield to maturity

d) Present value

43) What do you call the graphic presentation showing a relationship between bonds of

similar quality but different maturity dates?

a) A bid-ask sheet

b) A laddered chart

c) A yield curve

d) A bond curve

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