FINA 061 Bloomberg Concept Exam 2 Questions And Verified Answers

Why is fixed income called Fixed income? Correct Ans - Because the repayment amounts and timings are fixed for ordinary bonds Why does the United States have a strong reputation for creditworthiness? Correct Ans - because it has the right to tax the wealthiest population on earth. What is one reason why foreign governments lend to the U.S. government? Correct Ans - To build liquid FX reserves What does one yellow bar depict in this debt distribution diagram? Correct Ans - Coupon repayment Which one of the following actors benefits when interest rates go up? Correct Ans - An investor who is about to buy bonds. When investors doubt the creditworthiness of a borrower, how do they alter their calculation of the bond yield to take into account these doubts? Correct Ans - Investors do not after the calculation As a general rule, what percentage of debt to GDP will make a government's bond yields spike? Correct Ans - there is no general rule What is true of both the U.K. and the U.S.? Correct Ans - Both countries are highly creditworthy. What is the primary reason for U.S. government bond yields to ripple through the bond market? Correct Ans - The large government bond market competes for investors attention via yields A rise in which of the following measures would typically send a government bond price up? Correct Ans - Creditworthiness How do investors compare bonds? Correct Ans - by comparing the yields of single bonds Which of the following is the strongest driver of inflation? Correct Ans - wartime activities