CPD Portal Trustee Tutor: Issue 14 – Investing in bonds First Name *Last Name *Organization *Email Address *Phone *Assessment Questions1. Members' retirement fund contributions are invested in four main asset classes. These are: *a. Equities, shares, bonds and cash.b. Equities, bonds, cash and debentures.c. Equities, bonds, property and cash.d. None of the above.An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws. *a. Trueb. False3. Institutions will issue bonds: *a. To raise money to fund projects or operations.b. As a form of “I owe you” to be repaid at a future date.c. With an interest rate to be paid to the bondholder.d. All of the above.4. Choose the INCORRECT statement: Investors will buy bonds to: *a. Diversify their portfolios.b. Raise money to pay for their home.c. Earn a regular interest income.d. Invest for a set period of time.5. Choose the correct definition: *a. The coupon rate of a bond is the interest rate that the issuer will pay over the time period of the bond.b. The bond's face value is the price of the bond in the secondary market.c. The bond's price is the same as the bond's face value.d. The maturity of the bond is how long the issuer has been in existence.6. Credit rating agencies assess the default risk, or credit risk, of bond issuers. They have an important influence on: *a. Interest ratesb. Investment appetitec. Bond pricingd. All of the above7. When interest rates are high, bond prices: *a. Are higher.b. Are lower.c. Stay the same.d. Will depend on the equity market.8. When inflation is high: *a. The Reserve Bank will increase interest rates to bring inflation under control.b. The coupon rates of existing bonds may become uncompetitive.c. The coupon rates of new issues of bonds will need to be higher to be competitive.d. All of the above.9. Inflation linked bonds protect the bondholder from the impact of inflation on both the interest and the face value at maturity of the bond. *a. Trueb. False10. Choose the INCORRECT statement: Most retirement funds invest in bonds because bonds are: *a. Diverse and liquid.b. Less volatile than equities.c. Not regulated by Regulation 28.d. Proven to provide a relatively attractive real return over the long term.SubmitPlease do not fill in this field.
