Series 7 Exam Practice Test 3: Corporate and U.S. Government Debt Securities

1. Which of the following is TRUE regarding guaranteed bonds:

2. A bond is convertible into common stock for $40. What is the conversion ratio?

3. CMOs purchase all of the following securities EXCEPT

4. Arrange the following Moody's bond ratings in order from safest to riskiest.

I. Baa1

II. Aa2

III. A3

IV. Aa1

5. Which of the following is the only yield found on the indenture of a bond?

6. Ayla is new to investing in bonds and she is very concerned about receiving timely payments of interest and principal. Which of the following types of bonds would be the LEAST suitable for Ayla?

7. Which TWO of the following are TRUE regarding sovereign bonds?

I. They are issued by foreign corporations

II. They are issued by foreign governments

III. The interest and principal is paid in U.S. dollars

IV. The interest and principal is paid in the issuer's currency

8. With everything else being equal, callable bonds would have a ________ yield than/as a non-callable bond.

9. Declan K. purchased a 5% ABC Corporate bond on Monday, May 10th with coupon dates January 1st and July 1st. How many days of accrued interest does Declan owe?

10. Which of the following CMO tranches is the most common?