Series 7 – General Securities Representative Exam Fixed Income Securities

Question 1

What is the standard par value (face value) of a typical corporate bond?

Accepted Answer

$1,000

Answer

The standard par value of a corporate bond is $1,000, which is the amount the issuer repays at maturity.

Question 2

When market interest rates rise, what generally happens to existing bond prices?

Accepted Answer

They fall

Answer

Bond prices and interest rates have an inverse relationship — when rates rise, existing bonds with lower coupons become less attractive, so their prices fall.

Question 3

A bond is said to be trading at a premium when its market price is:

Accepted Answer

Above par value

Answer

A bond trades at a premium when investors pay more than the $1,000 par value, typically because its coupon rate exceeds current market rates.

Question 4

Which type of bond is backed by the full faith and credit of the U.S. government?

Accepted Answer

Treasury bonds

Answer

U.S. Treasury bonds are direct obligations of the federal government, backed by its full faith and credit and taxing authority.

Question 5

A zero-coupon bond is best described as one that:

Accepted Answer

Pays no periodic interest and is issued at a discount to par

Answer

Zero-coupon bonds make no periodic interest payments; instead, they are sold at a deep discount and mature at par value, with the difference representing the investor's return.

Series 7 – General Securities Representative Exam Practice Test

Series 7 – General Securities Representative Exam Practice Test

Series 7 – General Securities Representative Exam Fixed Income Securities