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Finra Series-6 Exam - Topic 7 Question 59 Discussion

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?
C) exactly what he paid for the bond.
A) more than what he originally paid for the bond.
B) less than what he originally 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.

Finra Series-6 Exam - Topic 7 Question 59 Discussion

Actual exam question for Finra's Series-6 exam
Question #: 59
Topic #: 7
[All Series-6 Questions]

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?

Show Suggested Answer Hide 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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Twana
10 months ago
So he gets the interest too, right?
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Darci
10 months ago
I think he might get less, but not sure.
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Ernie
10 months ago
Wait, how can he sell for more? Isn't that risky?
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India
11 months ago
Definitely option A, that's how bonds work.
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Lashandra
11 months ago
He'll get more than he paid since rates dropped!
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Marsha
11 months ago
I feel like the answer could be less than what he paid because of the interest he received, but I’m not confident about that.
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Rhea
11 months ago
I practiced a similar question where the bond was sold after a rate change, and I think the answer was that he would receive more than the face value.
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Serita
11 months ago
I'm not entirely sure, but I think since the coupon rate is higher than the current market rate, Jack could get a premium on the bond.
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Ailene
11 months ago
I remember that when interest rates fall, bond prices usually go up. So, Jack might sell the bond for more than he paid.
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Franklyn
11 months ago
Okay, I think I've got a handle on this. The key is to focus on the project details provided, especially around the simplified Project Initiation Documentation and the use of the Daily Log for recording project information. That should help me determine the appropriate changes, if any, to the communication strategy.
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Raul
11 months ago
This one seems pretty straightforward. I'm pretty sure Divalproex Sodium can cause liver toxicity, so I'd go with C. LFT's.
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Anna
11 months ago
I have a feeling the right command will display user sessions clearly, and 'show netconf-yang sessions' sounds familiar.
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Leonora
11 months ago
I feel a bit confused—wasn't battery defined differently in some cases? I hope it's not aggravated assault that they're looking for.
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Reed
1 year 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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Louisa
1 year ago
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
1 year ago
C) exactly what he paid for the bond.
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Dorothy
1 year ago
B) less than what he originally paid for the bond.
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Lauran
1 year ago
A) more than what he originally paid for the bond.
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Melodie
1 year 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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Theresia
1 year ago
C) exactly what he paid for the bond.
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Dorathy
1 year ago
B) less than what he originally paid for the bond.
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Suzi
1 year ago
A) more than what he originally paid for the bond.
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Berry
1 year 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 year 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
1 year ago
User1: Exactly, that's how bond prices and interest rates work.
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Blythe
1 year ago
User2: Agreed, the bond price should increase when interest rates fall.
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Howard
1 year 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
1 year 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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Shawna
1 year ago
D: It's a good thing for Jack that interest rates have gone down.
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Margurite
1 year ago
C: So, Jack will be able to sell the bond for a higher price than he bought it for.
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Milly
1 year ago
B: That's right, the bond's market value increases when interest rates fall.
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Ashlyn
1 year ago
A: Jack will receive more than what he originally paid for the bond.
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Marya
1 year ago
D: It's a good thing for Jack that interest rates have gone down.
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Larae
1 year 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
1 year ago
B: That's right, the bond's market value increases when interest rates fall.
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Herminia
1 year ago
A: Jack will receive more than what he originally paid for the bond.
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Mertie
1 year 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
1 year 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
1 year ago
I think Jack will receive less than what he originally paid for the bond because interest rates have fallen.
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