Question 1

a sovereign bond has a maturity of 15 years. The bond is best described as a:

Accepted Answer

A)  perpetual bond. 
B)  pure discount bond. 
C)  capital market security. 
A)  perpetual bond. 
B)  pure discount bond. 
C)  capital market security. C

Question 2

Which of the following bond types provides the most benefit to a bondholder when bond prices are declining?

Accepted Answer

A)  Callable 
B)  Plain vanilla 
C)  Multiple put 
A)  Callable 
B)  Plain vanilla 
C)  Multiple put C

Question 3

relative to an otherwise similar option-free bond, a:

Accepted Answer

A)  putable bond will trade at a higher price. 
B)  callable bond will trade at a higher price. 
C)  convertible bond will trade at a lower price. 
A)  putable bond will trade at a higher price. 
B)  callable bond will trade at a higher price. 
C)  convertible bond will trade at a lower price. A

Question 4

a South african company issues bonds denominated in pound sterling that are sold to investors in the united Kingdom. These bonds can be best described as:

Accepted Answer

A)  eurobonds. 
B)  global bonds. 
C)  foreign bonds. 
A)  eurobonds. 
B)  global bonds. 
C)  foreign bonds.

Question 5

a 10-year bond was issued four years ago. The bond is denominated in uS dollars, offers a coupon rate of 10% with interest paid semi-annually, and is currently priced at 102% of
Par) The bond's:

Accepted Answer

A)  tenor is six years. 
B)  nominal rate is 5%. 
C)  redemption value is 102% of the par value. 
A)  tenor is six years. 
B)  nominal rate is 5%. 
C)  redemption value is 102% of the par value.

Question 6

Which of the following best describes a convertible bond's conversion premium?

Accepted Answer

A)  bond price minus conversion value 
B)  Par value divided by conversion price 
C)  Current share price multiplied by conversion ratio 
A)  bond price minus conversion value 
B)  Par value divided by conversion price 
C)  Current share price multiplied by conversion ratio

Question 7

an investor in a country with an original issue discount tax provision purchases a 20-year zero-coupon bond at a deep discount to par value. The investor plans to hold the bond Until the maturity date. The investor will most likely report:

Accepted Answer

A)  a capital gain at maturity. 
B)  a tax deduction in the year the bond is purchased. 
C)  taxable income from the bond every year until maturity. 
A)  a capital gain at maturity. 
B)  a tax deduction in the year the bond is purchased. 
C)  taxable income from the bond every year until maturity.

Question 8

a company has issued a floating-rate note with a coupon rate equal to the three-month libor + 65 basis points. interest payments are made quarterly on 31 March, 30 June, 30 September, and 31 december. on 31 March and 30 June, the three-month libor is 1.55% And 1.35%, respectively. The coupon rate for the interest payment made on 30 June is:

Accepted Answer

A)  2.00%. 
B)  2.10%. 
C)  2.20%. 
A)  2.00%. 
B)  2.10%. 
C)  2.20%.

Question 9

Which of the following type of debt obligation most likely protects bondholders when the assets serving as collateral are non-performing?

Accepted Answer

A)  Covered bonds 
B)  Collateral trust bonds 
C)  Mortgage-backed securities 
A)  Covered bonds 
B)  Collateral trust bonds 
C)  Mortgage-backed securities

Question 10

The provision that provides bondholders the right to sell the bond back to the issuer at a predetermined price prior to the bond's maturity date is referred to as:

Accepted Answer

A)  a put provision. 
B)  a make-whole call provision. 
C)  an original issue discount provision. 
A)  a put provision. 
B)  a make-whole call provision. 
C)  an original issue discount provision.

Question 11

Which type of bond most likely earns interest on an implied basis?

Accepted Answer

A)  Floater 
B)  Conventional bond 
C)  Pure discount bond 
A)  Floater 
B)  Conventional bond 
C)  Pure discount bond

Question 12

The benefit to the issuer of a deferred coupon bond is most likely related to:

Accepted Answer

A)  tax management. 
B)  cash flow management. 
C)  original issue discount price. 
A)  tax management. 
B)  cash flow management. 
C)  original issue discount price.

Question 13

investors seeking some general protection against a poor economy are most likely to select a:

Accepted Answer

A)  deferred coupon bond. 
B)  credit-linked coupon bond. 
C)  payment-in-kind coupon bond. 
A)  deferred coupon bond. 
B)  credit-linked coupon bond. 
C)  payment-in-kind coupon bond.

Question 14

Which of the following best describes a negative bond covenant? The requirement to:

Accepted Answer

A)  insure and maintain assets. 
B)  comply with all laws and regulations. 
C)  maintain a minimum interest coverage ratio. 
A)  insure and maintain assets. 
B)  comply with all laws and regulations. 
C)  maintain a minimum interest coverage ratio.

Question 15

Which of the following best describes a negative bond covenant? The issuer is:

Accepted Answer

A)  required to pay taxes as they come due. 
B)  prohibited from investing in risky projects. 
C)  required to maintain its current lines of business. 
A)  required to pay taxes as they come due. 
B)  prohibited from investing in risky projects. 
C)  required to maintain its current lines of business.

Question 16

The legal contract that describes the form of the bond, the obligations of the issuer, and the rights of the bondholders can be best described as a bond's:

Accepted Answer

A)  covenant. 
B)  indenture. 
C)  debenture. 
A)  covenant. 
B)  indenture. 
C)  debenture.

Question 17

an affirmative covenant is most likely to stipulate:

Accepted Answer

A)  limits on the issuer's leverage ratio. 
B)  how the proceeds of the bond issue will be used. 
C)  the maximum percentage of the issuer's gross assets that can be sold. 
A)  limits on the issuer's leverage ratio. 
B)  how the proceeds of the bond issue will be used. 
C)  the maximum percentage of the issuer's gross assets that can be sold.

Question 18

investors who believe that interest rates will rise most likely prefer to invest in:

Accepted Answer

A)  inverse floaters. 
B)  fixed-rate bonds. 
C)  floating-rate notes. 
A)  inverse floaters. 
B)  fixed-rate bonds. 
C)  floating-rate notes.

Question 19

relative to domestic and foreign bonds, eurobonds are most likely to be:

Accepted Answer

A)  bearer bonds. 
B)  registered bonds. 
C)  subject to greater regulation. 
A)  bearer bonds. 
B)  registered bonds. 
C)  subject to greater regulation.

Question 20

Which of the following provisions is a benefit to the issuer?

Accepted Answer

A)  Put provision 
B)  Call provision 
C)  Conversion provision 
A)  Put provision 
B)  Call provision 
C)  Conversion provision

a sovereign bond has a maturity of 15 years. The bond is best described as a:

Which of the following bond types provides the most benefit to a bondholder when bond prices are declining?

relative to an otherwise similar option-free bond, a:

a South african company issues bonds denominated in pound sterling that are sold to investors in the united Kingdom. These bonds can be best described as:

a 10-year bond was issued four years ago. The bond is denominated in uS dollars, offers a coupon rate of 10% with interest paid semi-annually, and is currently priced at 102% of Par) The bond's:

Which of the following best describes a convertible bond's conversion premium?

an investor in a country with an original issue discount tax provision purchases a 20-year zero-coupon bond at a deep discount to par value. The investor plans to hold the bond Until the maturity date. The investor will most likely report:

Which of the following type of debt obligation most likely protects bondholders when the assets serving as collateral are non-performing?

The provision that provides bondholders the right to sell the bond back to the issuer at a predetermined price prior to the bond's maturity date is referred to as:

Which type of bond most likely earns interest on an implied basis?

The benefit to the issuer of a deferred coupon bond is most likely related to:

investors seeking some general protection against a poor economy are most likely to select a:

Which of the following best describes a negative bond covenant? The requirement to:

Which of the following best describes a negative bond covenant? The issuer is:

The legal contract that describes the form of the bond, the obligations of the issuer, and the rights of the bondholders can be best described as a bond's:

an affirmative covenant is most likely to stipulate:

investors who believe that interest rates will rise most likely prefer to invest in:

relative to domestic and foreign bonds, eurobonds are most likely to be:

Which of the following provisions is a benefit to the issuer?

Fixed-Income Markets: Issuance, Trading, and Funding

Introduction to Fixed-Income Valuation

Introduction to Asset-Backed Securities

Understanding Fixed Income Risk and Return

Fundamentals of Credit Analysis

The Term Structure and Interest Rate Dynamics

The Arbitrage-Free Valuation Framework

Valuation and Analysis of Bonds With Embedded Options

Credit Analysis Models

Credit Default Swaps

Overview of Fixed-Income Portfolio Management

Liability-Driven and Index-Based Strategies

Yield Curve Strategies

Fixed-Income Active Management: Credit Strategies

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Exam 1: Fixed-Income Securities: Defining Elements

a sovereign bond has a maturity of 15 years. The bond is best described as a:

Which of the following bond types provides the most benefit to a bondholder when bond prices are declining?

relative to an otherwise similar option-free bond, a:

a South african company issues bonds denominated in pound sterling that are sold to investors in the united Kingdom. These bonds can be best described as:

a 10-year bond was issued four years ago. The bond is denominated in uS dollars, offers a coupon rate of 10% with interest paid semi-annually, and is currently priced at 102% of Par) The bond's:

Which of the following best describes a convertible bond's conversion premium?

an investor in a country with an original issue discount tax provision purchases a 20-year zero-coupon bond at a deep discount to par value. The investor plans to hold the bond Until the maturity date. The investor will most likely report:

Which of the following type of debt obligation most likely protects bondholders when the assets serving as collateral are non-performing?

The provision that provides bondholders the right to sell the bond back to the issuer at a predetermined price prior to the bond's maturity date is referred to as:

Which type of bond most likely earns interest on an implied basis?

The benefit to the issuer of a deferred coupon bond is most likely related to:

investors seeking some general protection against a poor economy are most likely to select a:

Which of the following best describes a negative bond covenant? The requirement to:

Which of the following best describes a negative bond covenant? The issuer is:

The legal contract that describes the form of the bond, the obligations of the issuer, and the rights of the bondholders can be best described as a bond's:

an affirmative covenant is most likely to stipulate:

investors who believe that interest rates will rise most likely prefer to invest in:

relative to domestic and foreign bonds, eurobonds are most likely to be:

Which of the following provisions is a benefit to the issuer?

Fixed-Income Markets: Issuance, Trading, and Funding

Introduction to Fixed-Income Valuation

Introduction to Asset-Backed Securities

Understanding Fixed Income Risk and Return

Fundamentals of Credit Analysis

The Term Structure and Interest Rate Dynamics

The Arbitrage-Free Valuation Framework

Valuation and Analysis of Bonds With Embedded Options

Credit Analysis Models

Credit Default Swaps

Overview of Fixed-Income Portfolio Management

Liability-Driven and Index-Based Strategies

Yield Curve Strategies

Fixed-Income Active Management: Credit Strategies

Filters