Stock Broker Investment Products & Securities Types

Question 1

Which type of bond is backed by the full faith and credit of the US government and is considered the safest fixed-income investment?

Accepted Answer

US Treasury bonds

Answer

Municipal bonds

Answer

Corporate bonds

Answer

Agency bonds

Question 2

What is a convertible bond?

Accepted Answer

A bond that can be exchanged for a set number of the issuer's common shares

Answer

A bond that adjusts its interest rate with inflation

Answer

A bond issued in foreign currency

Answer

A bond with no fixed maturity date

Question 3

Which type of preferred stock allows unpaid dividends to accumulate and must be paid before common stock dividends?

Accepted Answer

Cumulative preferred

Answer

Participating preferred

Answer

Callable preferred

Answer

Convertible preferred

Question 4

What is the primary characteristic of a zero-coupon bond?

Accepted Answer

It is issued at a discount and pays no periodic interest, returning face value at maturity

Answer

It pays interest monthly

Answer

It adjusts interest payments based on the prime rate

Answer

It can be called before maturity at par

Question 5

An ETF (Exchange-Traded Fund) differs from a mutual fund primarily because ETFs:

Accepted Answer

Trade on exchanges throughout the day like stocks

Answer

Can only hold bonds

Answer

Are exempt from SEC registration

Answer

Have no expense ratios

Question 6

Which of the following is a characteristic of a 'callable' bond?

Accepted Answer

The issuer can redeem the bond before maturity at a specified price

Answer

The holder can demand early repayment

Answer

The bond adjusts its coupon based on market rates

Answer

The bond converts to stock automatically