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Question 1 of 10
1. Question
In which types of bonds the holder has the right to redeem (or put back) with the issuer at par value?
I. Callable bonds
II. Bearer bonds
III. Fully registered bonds
IV. Put bondsCorrect
Put bonds: bonds the holder has the right to redeem (or put back) with the issuer at par value, so the holder can liquidate his investment before maturation if desired.
Incorrect
Put bonds: bonds the holder has the right to redeem (or put back) with the issuer at par value, so the holder can liquidate his investment before maturation if desired.
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Question 2 of 10
2. Question
Which types of bonds are no longer issued?
I. Partially registered bonds
II. Bearer bonds
III. Coupon Bonds
IV. Registered coupon bondsCorrect
Partially registered bonds and bearer bonds are both no longer issued.
Bearer bonds: they are also known as coupon bonds.
Partially registered bonds: these bonds known as registered coupon bonds.Incorrect
Partially registered bonds and bearer bonds are both no longer issued.
Bearer bonds: they are also known as coupon bonds.
Partially registered bonds: these bonds known as registered coupon bonds. -
Question 3 of 10
3. Question
Which is (are) secured bonds?
I. Guaranteed bonds
II. Mortgage bonds
III. Debentures
IV. Income bondsCorrect
Secured bonds and their collateral are:
•Guaranteed bonds: backed by another firm like a parent company.
•Mortgage bonds: backed by property owned by the issuer.Incorrect
Secured bonds and their collateral are:
•Guaranteed bonds: backed by another firm like a parent company.
•Mortgage bonds: backed by property owned by the issuer. -
Question 4 of 10
4. Question
In case of insolvency, Collateral trusts are backed by –
Correct
Collateral trusts: backed by financial assets the issuer owns and held by a trustee (a financial institution like a bank) in case of insolvency.
Incorrect
Collateral trusts: backed by financial assets the issuer owns and held by a trustee (a financial institution like a bank) in case of insolvency.
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Question 5 of 10
5. Question
A corporate bond carrying a sinking fund provision is considered-
Correct
A corporate bond carrying a sinking fund provision is considered less risky.
Incorrect
A corporate bond carrying a sinking fund provision is considered less risky.
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Question 6 of 10
6. Question
When a bond reaches the speculative rating, it is considered-
Correct
Once a bond reaches the speculative rating, it is considered higher in risk.
Incorrect
Once a bond reaches the speculative rating, it is considered higher in risk.
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Question 7 of 10
7. Question
How will you calculate current yield?
I. Current yield = annual interest – market price
II. Current yield = annual interest + market price
III. Current yield = annual interest ÷ market price
IV. Current yield = annual interest * market priceCorrect
Current yield = annual interest ÷ market price
Incorrect
Current yield = annual interest ÷ market price
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Question 8 of 10
8. Question
George Jones bought a bond at $200, with a coupon rate of 7 percent. His annual interest comes to 0.07 times 200, equaling $14. The bond now trades at $180. What will be the current yield?
Correct
To calculate the current yield, you take the annual interest he receives ($14) and divide it by the market price of $180. This makes the current yield of the bond 7.78 percent ($14 ÷ $180).
Incorrect
To calculate the current yield, you take the annual interest he receives ($14) and divide it by the market price of $180. This makes the current yield of the bond 7.78 percent ($14 ÷ $180).
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Question 9 of 10
9. Question
Which is the correct formula to calculate accrued interest?
I. Accrued interest= (Days between coupon day and settlement day ÷ 360)+ annual interest
II. Accrued interest= (Days between coupon day and settlement day ÷ 360)- annual interest
III. Accrued interest= (Days between coupon day and settlement day * 360) ÷ annual interest
IV. Accrued interest= (Days between coupon day and settlement day ÷ 360)× annual interestCorrect
How to calculate accrued interest: (Days between coupon day and settlement day ÷ 360)× annual interest
Incorrect
How to calculate accrued interest: (Days between coupon day and settlement day ÷ 360)× annual interest
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Question 10 of 10
10. Question
XYZ corporate bond is a 5 percent bond, and has paid interest on May 31. Your client buys this bond, and the purchase settles on August 31. This bond receives $50 interest (5 percent of $1,000) annually. What will be the accrued interest for 90 days?
Correct
(90 ÷ 360) × $50 = $12.50
Incorrect
(90 ÷ 360) × $50 = $12.50