Test your knowledge on bonds

Test you knowledge on bonds before you continue and try to complete all quests without mistakes!

Quest: Bonds

What are bonds?

Debt of a company or government Outstanding loans from companies and governments investors can buy Outstanding loans from specific companies investors can buy

Reward: +10 XP 0 0 0

Quest: Collateral

What is the collateral of the bank when they issue a mortgage?

Your savings Your salary The asset that is bought using the mortgage

Reward: +10 XP 0 0 0

Quest: Type of bonds

What two types of bonds are there?

Common and preferred Mature and immature Secured and unsecured Callable and non callable

Reward: +10 XP 0 0 0

Quest: Maturity date

What is the maturity date of a bond?

How long it takes to get interest payment The maximum age of the bond How mature the bond is when you buy one

Reward: +10 XP 0 0 0

Quest: Par value

What is par value?

The amount of money the issuer (company or government) agrees to repay (you, the buyer of the bond) when the bond reaches its maturity date. Represents how much the bond costs in the market Par value is the same as face value Determines the amount of interest

Reward: +10 XP 0 0 0

Quest: Interest rate risk

What is interest rate risk?

The risk you have when buying bonds with low interest (coupon) rates The risk of buying bonds with high interest rates while market interest rates are low The negative effect of a change in market interest rates on bonds The risk of buying bonds above the par value

Reward: +10 XP 0 0 0

Quest: Coupon rate

What is the coupon rate?

The rate at which coupons are distributed to buyers The rate at which interest payments are paid (for example quarterly) The amount of interest you get paid The amount of times you are eligible to receive interest

Reward: +10 XP 0 0 0

Quest: Yield till maturity

What is the yield till maturity?

Shows how much an investor will earn if the bond is held till the maturity date Determines the impact of interest rate risk Shows how many quarterly payments are made Shows the maximum age of the bond

Reward: +10 XP 0 0 0

Quest: Long maturity date

What is true about bonds with a long maturity date?

Bonds with long maturity = higher interest rate risk Bonds with long maturity = lower interest rate risk Bonds with long maturity = higher coupon rates Bonds with long maturity = lower coupon rates

Reward: +10 XP 0 0 0

Quest: Bond investment

Which type of bond requires an initial investment of at least $10.000?

Reward: +10 XP 0 0 0

Quest: Treasury bonds collateral

What do treasury bonds have as collateral?

The project that is funded with the bond Mortgages, taxes or other third parties Back by the U.S. Government No collateral

Reward: +10 XP 0 0 0

Quest: Bonds and market interest

Bond A has a coupon rate of 3%. Market interest rates are rising in the next 12 months. The company releases a new bond B to the public with a coupon rate of 3.5%. What will happen with bond A?

The coupon rate will rise to 3.5% The coupon rate will always be 3% Market price will go up Market price will go down The yield till maturity for both bonds will stay the same eventually

Reward: +10 XP 0 0 0