Fixed Income Test 1 (Answered)
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
Higher priority on cash flows
Tax deductibility by issuer
Infinite Life
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)
Minimum trading sizes for equities are smaller
Equities tend to more often be traded on electronic exchanges
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 A is correct
Only B is correct
A and B are both correct
Neither A nor B are correct
Only B is correct
All of the following are examples of Fixed Income asset classes except:
Convertibles
High Yield
Interest Rate Options
RMBS
Interest Rate Options
A bond's indenture:
is the same as a debenture.
, contains its covenants.
relates only to its interest and principal payments.
contains its covenants
Which of the following bond covenants is most accurately described as an
affirmative covenant? The bond issuer must not:
violate laws or regulations.
issue more debt with the same or higher seniority.
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 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.
A cap is an advantage to the bondholder, while a floor is an advantage to the
issuer.
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
information not found in the indenture.
Call price
Coupon rate
Overview of issuer's business
Maturity daty
Overview of issuer's business
Another term for a bond's maturity is:
tenor.
par value.
duration.
Tenor
All of the following are examples of types of issuers of fixed securities except:
SPV/SPE
Corporate
CUSIP
Government
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
Higher priority on cash flows
Tax deductibility by issuer
Infinite Life
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)
Minimum trading sizes for equities are smaller
Equities tend to more often be traded on electronic exchanges
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 A is correct
Only B is correct
A and B are both correct
Neither A nor B are correct
Only B is correct
All of the following are examples of Fixed Income asset classes except:
Convertibles
High Yield
Interest Rate Options
RMBS
Interest Rate Options
A bond's indenture:
is the same as a debenture.
, contains its covenants.
relates only to its interest and principal payments.
contains its covenants
Which of the following bond covenants is most accurately described as an
affirmative covenant? The bond issuer must not:
violate laws or regulations.
issue more debt with the same or higher seniority.
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 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.
A cap is an advantage to the bondholder, while a floor is an advantage to the
issuer.
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
information not found in the indenture.
Call price
Coupon rate
Overview of issuer's business
Maturity daty
Overview of issuer's business
Another term for a bond's maturity is:
tenor.
par value.
duration.
Tenor
All of the following are examples of types of issuers of fixed securities except:
SPV/SPE
Corporate
CUSIP
Government
