A – multiple choices, 30
B – Short answer questions, 3 sub-sections each, 30
2 hours
The four currencies in which the majority of domestic and
international bonds are denominated are
A
A) U.S. dollar, the euro, the Indian rupee, and the Chinese yuan.
B
B) U.S. dollar, the euro, the pound sterling, and the Swiss franc.
C
C) U.S. dollar, the euro, the Swiss franc, and the yen.
D
D) U.S. dollar, the euro, the pound sterling, and the yen.
A "foreign bond" issue is
A
A) one denominated in a particular currency but sold to investors in national
capital markets other than the country that issued the denominating currency.
B
B) one offered by a foreign borrower to investors in a national market and
denominated in that nation's currency.
C
C) for example, a German MNC issuing dollar-denominated bonds to U.S.
investors.
D
D) one offered by a foreign borrower to investors in a national market and
denominated in that nation's currency (e.g., a German MNC issuing dollar-
denominated bonds to U.S. investors).
A "global bond" issue
A
A) is a very large international bond offering by several borrowers pooled
together.
B
B) is a very large international bond offering by a single borrower that is
simultaneously sold in several national bond markets.
C
C) has higher yields for the purchasers.
D
D) has a lower liquidity.
A global bond issue denominated in U.S. dollars and issued by U.S.
corporations
A
A) trade as Eurobonds overseas.
B
B) trade as domestic bonds in the U.S. domestic market.
C
C) trade as Eurobonds overseas and trade as domestic bonds in the U.S.
domestic market.
D
, D) none of the options
Straight fixed-rate bond issues have
A
A) a designated maturity date at which the principal of the bond issue is
promised to be repaid. During the life of the bond, fixed coupon payments,
which are a percentage of the face value, are paid as interest to the
bondholders.
B
B) a designated maturity date at which the principal of the bond issue is
promised to be repaid. During the life of the bond, coupon payments, which
are a percentage of the face value, are computed according to a fixed
formula.
C
C) a fixed payment, which amortizes the debt, like a house payment or car
payment.
D
D) none of the options
Six-month U.S. dollar LIBOR is currently 4.25 percent; your firm
issued floating-rate notes indexed to six-month U.S. dollar LIBOR
plus 50 basis points. What is the amount of the next semi-annual
coupon payment per U.S. $1,000 of face value?
A
A) $43.75
B
B) $47.50
C
C) $23.75
D
D) $46.875
Floating-rate notes (FRN)
A
A) experience very volatile price changes between reset dates.
B
B) are typically medium-term bonds with coupon payments indexed to some
reference rate (e.g., LIBOR).
C
C) appeal to investors with strong need to preserve the principal value of the
investment should they need to liquidate prior to the maturity of the bonds.
D
D) are typically medium-term bonds with coupon payments indexed to some
reference rate (e.g., LIBOR), and appeal to investors with strong need to
preserve the principal value of the investment should they need to liquidate
prior to the maturity of the bonds.
There are two types of equity related bonds:
A
A) convertible bonds and dual currency bonds.
B – Short answer questions, 3 sub-sections each, 30
2 hours
The four currencies in which the majority of domestic and
international bonds are denominated are
A
A) U.S. dollar, the euro, the Indian rupee, and the Chinese yuan.
B
B) U.S. dollar, the euro, the pound sterling, and the Swiss franc.
C
C) U.S. dollar, the euro, the Swiss franc, and the yen.
D
D) U.S. dollar, the euro, the pound sterling, and the yen.
A "foreign bond" issue is
A
A) one denominated in a particular currency but sold to investors in national
capital markets other than the country that issued the denominating currency.
B
B) one offered by a foreign borrower to investors in a national market and
denominated in that nation's currency.
C
C) for example, a German MNC issuing dollar-denominated bonds to U.S.
investors.
D
D) one offered by a foreign borrower to investors in a national market and
denominated in that nation's currency (e.g., a German MNC issuing dollar-
denominated bonds to U.S. investors).
A "global bond" issue
A
A) is a very large international bond offering by several borrowers pooled
together.
B
B) is a very large international bond offering by a single borrower that is
simultaneously sold in several national bond markets.
C
C) has higher yields for the purchasers.
D
D) has a lower liquidity.
A global bond issue denominated in U.S. dollars and issued by U.S.
corporations
A
A) trade as Eurobonds overseas.
B
B) trade as domestic bonds in the U.S. domestic market.
C
C) trade as Eurobonds overseas and trade as domestic bonds in the U.S.
domestic market.
D
, D) none of the options
Straight fixed-rate bond issues have
A
A) a designated maturity date at which the principal of the bond issue is
promised to be repaid. During the life of the bond, fixed coupon payments,
which are a percentage of the face value, are paid as interest to the
bondholders.
B
B) a designated maturity date at which the principal of the bond issue is
promised to be repaid. During the life of the bond, coupon payments, which
are a percentage of the face value, are computed according to a fixed
formula.
C
C) a fixed payment, which amortizes the debt, like a house payment or car
payment.
D
D) none of the options
Six-month U.S. dollar LIBOR is currently 4.25 percent; your firm
issued floating-rate notes indexed to six-month U.S. dollar LIBOR
plus 50 basis points. What is the amount of the next semi-annual
coupon payment per U.S. $1,000 of face value?
A
A) $43.75
B
B) $47.50
C
C) $23.75
D
D) $46.875
Floating-rate notes (FRN)
A
A) experience very volatile price changes between reset dates.
B
B) are typically medium-term bonds with coupon payments indexed to some
reference rate (e.g., LIBOR).
C
C) appeal to investors with strong need to preserve the principal value of the
investment should they need to liquidate prior to the maturity of the bonds.
D
D) are typically medium-term bonds with coupon payments indexed to some
reference rate (e.g., LIBOR), and appeal to investors with strong need to
preserve the principal value of the investment should they need to liquidate
prior to the maturity of the bonds.
There are two types of equity related bonds:
A
A) convertible bonds and dual currency bonds.
