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Cannon Trust School II - Sample Exam
Questions and Correct Answers
Bonds that can be traded for stock are known as Ans: Convertible
Bonds
A company most likely will call bonds (assuming bonds are
callable) it had previously issued if what occurs? Ans: Interest
Rates Fall
The LOWESTS&P's rating that would qualify as investment grade is
what? Ans: BBB-
A treasury bill is taxable by which of the following entities? Ans:
Higher liquidity and higher marketability
You manage a trust that holds zero-coupon bonds. To determine
the tax liability, you should do what? Ans: Report the annual
accrual each year.
If investors expect interest rates to increase they will do what?
Ans: Decrease Duration
A municipal bond issue secured by the income from a bridge or
toll road is called a: Ans: Revenue Bond Issue
Dividend distributions from mutual funds are: Ans: taxable as
ordinary income or qualified dividends depending on status
Open-end and closed-end investment companies differ in their
Ans: capitalization.
© 2025 All rights reserved
Cannon Trust School II - Sample Exam
Questions and Correct Answers
Bonds that can be traded for stock are known as Ans: Convertible
Bonds
A company most likely will call bonds (assuming bonds are
callable) it had previously issued if what occurs? Ans: Interest
Rates Fall
The LOWESTS&P's rating that would qualify as investment grade is
what? Ans: BBB-
A treasury bill is taxable by which of the following entities? Ans:
Higher liquidity and higher marketability
You manage a trust that holds zero-coupon bonds. To determine
the tax liability, you should do what? Ans: Report the annual
accrual each year.
If investors expect interest rates to increase they will do what?
Ans: Decrease Duration
A municipal bond issue secured by the income from a bridge or
toll road is called a: Ans: Revenue Bond Issue
Dividend distributions from mutual funds are: Ans: taxable as
ordinary income or qualified dividends depending on status
Open-end and closed-end investment companies differ in their
Ans: capitalization.
© 2025 All rights reserved
