Finra Exam Series-6 Topic 7 Question 59 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 59
Topic #: 7

Jack purchased a new bond of the Candlestick Corporation for its face value of $1,000. The bond has a coupon rate of 3.5%, makes semiannual interest payments, and matures in fifteen years. A year after purchasing the bond, Jack needs to sell the bond to offset some major expenses he incurred when his home caught on fire. Interest rates in the economy at this time have fallen to 3.0%.

Given this scenario, when Jack sells the bond, he can expect to receive which of the following?

Amore than what he originally paid for the bond.

Bless than what he originally paid for the bond.

Cexactly what he paid for the bond.

D$965, which is what he paid for the bond less the $35 in interest he received during his year of owning the bond.

Show Suggested Answer

Suggested Answer: C

If Mr. Gaunt believes he is still due money from Savvy, and Savvy disagrees, Ari has six years to submit his claim to arbitration under FINRA's Code of Arbitration. Ari cannot sue Savvy in a court of law, and the decision of the arbitration panel is final.

by Bette at Apr 22, 2023, 03:24 AM

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Reed

1 months ago

Option E: Jack uses the bond to roast marshmallows while he waits for the fire department to arrive. Gotta stay positive in a crisis, right?

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Kattie

3 days ago

C) exactly what he paid for the bond.

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Dorothy

8 days ago

B) less than what he originally paid for the bond.

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Lauran

16 days ago

A) more than what he originally paid for the bond.

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Melodie

1 months ago

Option D? Really? That's like saying 'Here's your money back, minus the free lunch I just had.' Nah, I'll pass on that one.

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Dorathy

6 days ago

B) less than what he originally paid for the bond.

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Suzi

13 days ago

A) more than what he originally paid for the bond.

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Berry

1 months ago

Hmm, this seems like a trick question. I'm going to go with Option C just to play it safe.

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Antonio

1 months ago

I'm pretty sure Option A is the right answer. Who doesn't love making a profit on their investments?

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Frederica

19 days ago

User1: Exactly, that's how bond prices and interest rates work.

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Blythe

24 days ago

User2: Agreed, the bond price should increase when interest rates fall.

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Howard

24 days ago

User1: I think Option A is correct too. Jack should get more than what he paid for the bond.

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Jutta

2 months ago

Option B is the correct answer. The bond's market value will increase when interest rates decrease, so Jack will receive more than he originally paid for the bond.

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Ashlyn

8 hours ago

A: Jack will receive more than what he originally paid for the bond.

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Marya

2 days ago

D: It's a good thing for Jack that interest rates have gone down.

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Larae

3 days ago

C: So, Jack will be able to sell the bond for a higher price than he bought it for.

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Gabriele

8 days ago

B: That's right, the bond's market value increases when interest rates fall.

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Herminia

24 days ago

A: Jack will receive more than what he originally paid for the bond.

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Mertie

2 months ago

But what about the interest payments Jack received during the year? Wouldn't that offset the decrease in value due to falling interest rates?

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Bea

2 months ago

I agree with Stephanie. When interest rates fall, the value of existing bonds increases, so Jack will receive less than $1,000 when he sells the bond.

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Stephanie

3 months ago

I think Jack will receive less than what he originally paid for the bond because interest rates have fallen.

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