Fixed Income Review Test and Quizzes
(Answered) Verified Solution
The US debt market is larger than the US equity market? (T/F)
TRUE
All of the following are differentiating factors of fixed income securities versus
equity securities except for:
-Fixed claim
-Infinite Life
-Tax deductibility by user
-Higher priority on cash flows
Infinite Life
A bond's CUSIP is defined as:
A) A unique nine digit number to identify individual bonds
B) A number assigned by the SEC to all registered bond offerings
Only A is correct
All of the following are differences in how bond trade versus equities except:
-Equities generally trade at a wider spread differential
-Bonds trade in a more opaque market (less pricing data readily available)
-Equities tend to more often be traded on electronic exchanges
-Minimum trading sizes for equities are smaller
Equities generally trade at a wider spread differential
In terms of returns, bond investors who buy and intend to hold a bond to maturity
are primarily focused:
A)Price appreciation
B)Principal return and income yield
Only B is correct
All of the following are examples of Fixed Income asset classes except:
-Convertibles
-Interest Rate Options
-RMBS
-High Yield
Interest Rate Options
A bond's indenture:
-Contains its covenants
-relates only to its interest and principal payments
-is the same as a debenture
Contains its covenants
Which of the following bond covenants is most accurately described as an
affirmative covenant? The bond issuer must not:
-issue more debt with the same or higher seniority
-violate laws or regulations
-sell assets pledged as collateral
violate laws or regulations
, A pure-discount bond:
-always sells at par
-pays interest on a regular basis (typically semi-annually)
-does not pay interest on a regular basis
does not pay interest on a regular basis
Which of the following statements is most accurate with regard to floating-rate
issues that have caps and floors?
-A floor is an advantage to the bondholder, while a cap is an advantage to the
issuer
-A cap is an advantage to the bondholder, while a floor is an advantage to the
issuer
-A floor is an advantage to both the issuer and the bondholder, while a cap is a
disadvantage to both the issuer and the bondholder
A floor is an advantage to the bondholder, while a cap is an advantage to the issuer
For a fixed income new issuance, a prospectus typically contains this piece of
information not found in the indenture
-Maturity date
-Coupon rate
-Call price
-Overview of issuer's business
Overview of issuer's business
Another term for a bond's maturity is
-par value
-duration
-tenor
tenor
All of the following are examples of types of issuers of fixed securities except:
-Government
-Corporate
-CUSIP
-SPV/SPE
CUSIP
All of the following terms are synonymous with non-investment grade debt
accept:
-Junk bonds
-High yield
-BBB Bonds
BBB Bonds
Which item below ranks investment grade ratings from the highest credit quality
first to the lowest credit quality last.
-BB+,BB,A,AA,AAA
-AAA,AA,A,BBB
-BBB,BB+,A,AA,AAA
-AAA,AA,A,BBB,BB+
AAA, AA, A, BBB
(Answered) Verified Solution
The US debt market is larger than the US equity market? (T/F)
TRUE
All of the following are differentiating factors of fixed income securities versus
equity securities except for:
-Fixed claim
-Infinite Life
-Tax deductibility by user
-Higher priority on cash flows
Infinite Life
A bond's CUSIP is defined as:
A) A unique nine digit number to identify individual bonds
B) A number assigned by the SEC to all registered bond offerings
Only A is correct
All of the following are differences in how bond trade versus equities except:
-Equities generally trade at a wider spread differential
-Bonds trade in a more opaque market (less pricing data readily available)
-Equities tend to more often be traded on electronic exchanges
-Minimum trading sizes for equities are smaller
Equities generally trade at a wider spread differential
In terms of returns, bond investors who buy and intend to hold a bond to maturity
are primarily focused:
A)Price appreciation
B)Principal return and income yield
Only B is correct
All of the following are examples of Fixed Income asset classes except:
-Convertibles
-Interest Rate Options
-RMBS
-High Yield
Interest Rate Options
A bond's indenture:
-Contains its covenants
-relates only to its interest and principal payments
-is the same as a debenture
Contains its covenants
Which of the following bond covenants is most accurately described as an
affirmative covenant? The bond issuer must not:
-issue more debt with the same or higher seniority
-violate laws or regulations
-sell assets pledged as collateral
violate laws or regulations
, A pure-discount bond:
-always sells at par
-pays interest on a regular basis (typically semi-annually)
-does not pay interest on a regular basis
does not pay interest on a regular basis
Which of the following statements is most accurate with regard to floating-rate
issues that have caps and floors?
-A floor is an advantage to the bondholder, while a cap is an advantage to the
issuer
-A cap is an advantage to the bondholder, while a floor is an advantage to the
issuer
-A floor is an advantage to both the issuer and the bondholder, while a cap is a
disadvantage to both the issuer and the bondholder
A floor is an advantage to the bondholder, while a cap is an advantage to the issuer
For a fixed income new issuance, a prospectus typically contains this piece of
information not found in the indenture
-Maturity date
-Coupon rate
-Call price
-Overview of issuer's business
Overview of issuer's business
Another term for a bond's maturity is
-par value
-duration
-tenor
tenor
All of the following are examples of types of issuers of fixed securities except:
-Government
-Corporate
-CUSIP
-SPV/SPE
CUSIP
All of the following terms are synonymous with non-investment grade debt
accept:
-Junk bonds
-High yield
-BBB Bonds
BBB Bonds
Which item below ranks investment grade ratings from the highest credit quality
first to the lowest credit quality last.
-BB+,BB,A,AA,AAA
-AAA,AA,A,BBB
-BBB,BB+,A,AA,AAA
-AAA,AA,A,BBB,BB+
AAA, AA, A, BBB
