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100
Bonds 107:
Secured and Unsecured Bonds
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
1.
Unsecured bonds are issued with the issuer's promise to offer stock options in the future.
Choose wisely. There is only one correct answer.
True
False
False. The sellers do not offer stock options to investors at a later date when issuing unsecured bonds.
2.
The collateral behind a railroad car purchase may be the railroad car itself.
Choose wisely. There is only one correct answer.
True
False
True. Railroads commonly sell equipment trust certificates to buy new equipment. Sometimes, the collateral is the item that was bought.
3.
What secures revenue bonds?
Choose wisely. There is only one correct answer.
Fees levied by municipalities
Price hikes
Revenue generated by projects funded by the bonds
Taxes
Revenue generated by projects funded by the bonds. This revenue is used to pay interest and principal to investors.
4.
Which bond's interest and principal can be repaid by the US government?
Choose wisely. There is only one correct answer.
Treasury bond
General obligation bond
Municipal bond
None of the above
Treasury bond. The US Treasury sells its own bonds.
5.
Although unsecured bonds have no backing, they are protected from default by a promise to pay.
Choose wisely. There is only one correct answer.
True
False
True. This promise is called "full faith and credit," and many corporations and government units with good credit use it.
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DONE