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Question 1 of 10
1. Question
Which of the following statement is true related to the bond as a debt security:
I. Issuer owes a debt
II. Pay them interest
III. To repay the principal
IV. Issues to raise moneyCorrect
The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date.
Incorrect
The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date.
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Question 2 of 10
2. Question
Which of the following companies are considered as best bond rating companies:
I. Moody’s
II. Standard & Poor’s
III. Fitch
IV. VavmyCorrect
Many bonds are rated by bond rating companies. The three best known are Moody’s, Standard &Poor’s, and Fitch. These companies assign ratings to bonds based on their evaluation of the creditworthiness of the bond issuer.
Incorrect
Many bonds are rated by bond rating companies. The three best known are Moody’s, Standard &Poor’s, and Fitch. These companies assign ratings to bonds based on their evaluation of the creditworthiness of the bond issuer.
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Question 3 of 10
3. Question
Which of the following statement is true for term bonds:
Correct
Any particular bond always has a particular maturity date, but bond issuers can attempt to strategically issue bonds of different durations for the sake of financing their own activities. Term bonds are bonds of the same issuance which have the same maturity date.
Incorrect
Any particular bond always has a particular maturity date, but bond issuers can attempt to strategically issue bonds of different durations for the sake of financing their own activities. Term bonds are bonds of the same issuance which have the same maturity date.
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Question 4 of 10
4. Question
Which of the following are the required returns in arbitrage pricing theory:
I. Dividend policy
II. Market risk
III. Historical policy
IV. Dividend policy & Market riskCorrect
In arbitrage pricing theory, the required returns are functioned of two factors which have dividend policy and historical policy.
Incorrect
In arbitrage pricing theory, the required returns are functioned of two factors which have dividend policy and historical policy.
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Question 5 of 10
5. Question
Which of the following bonds repay the bondholders solely through taxation but contains provisions limiting how much the municipality can increase taxes to repay the bonds:
Correct
Limited-tax general obligation (LTGO) bonds repay the bondholders solely through taxation (as all general obligations do), but contains provisions limiting how much the municipality can increase taxes to repay the bonds.
Incorrect
Limited-tax general obligation (LTGO) bonds repay the bondholders solely through taxation (as all general obligations do), but contains provisions limiting how much the municipality can increase taxes to repay the bonds.
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Question 6 of 10
6. Question
Which of the following statement is true related to the Certificate of Participation:
I. It grants an investor the right to some lease revenues for a facility that is constructed through a municipal bond issuance.
II. It entitles the investor to the rights of the bondholder
III. COP participates in the ownership of the facility
IV. The major drawback of COPs is that they does not provide investors with a solid backup planCorrect
A certificate of participation (COP) grants an investor the right to some lease revenues for a facility that is constructed through a municipal bond issuance. Rather than entitling the investor to the rights of the bondholder, a COP participates in the ownership of the facility and the municipality
leases it until all the lease payments are made. COPs provide investors with a solid backup plan if the municipality defaults, for they then can sell or utilize the facility as they see fit.Incorrect
A certificate of participation (COP) grants an investor the right to some lease revenues for a facility that is constructed through a municipal bond issuance. Rather than entitling the investor to the rights of the bondholder, a COP participates in the ownership of the facility and the municipality
leases it until all the lease payments are made. COPs provide investors with a solid backup plan if the municipality defaults, for they then can sell or utilize the facility as they see fit. -
Question 7 of 10
7. Question
Which of the following statements are true related to zero coupon bonds:
I. Pay no Interest
II. Pay interest
III. No discount to its face value
IV. Deep discount to its face valueCorrect
Zero-coupon bonds don’t pay interest. Instead, their price is heavily discounted from face value. When the bond matures, bondholders receive the full face value, but they gain no interest in the meantime.
Incorrect
Zero-coupon bonds don’t pay interest. Instead, their price is heavily discounted from face value. When the bond matures, bondholders receive the full face value, but they gain no interest in the meantime.
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Question 8 of 10
8. Question
Which of the following companies are known as mutual funds:
Correct
Open-end MICs are more commonly known as mutual funds.
Incorrect
Open-end MICs are more commonly known as mutual funds.
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Question 9 of 10
9. Question
Which of the following notes are issued by municipalities who expect to repay the debts with grants from the federal government.
Correct
Grant anticipation notes (GANs) are issued by municipalities who expect to repay the debts with grants from the federal government.
Incorrect
Grant anticipation notes (GANs) are issued by municipalities who expect to repay the debts with grants from the federal government.
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Question 10 of 10
10. Question
Which of the following short-term obligations are like zero-coupon bonds, that’s don’t pay interest, but are sold at less than face value, and the buyer collects face value at maturity:
Correct
Treasury bills (T-bills) are short-term obligations issued by the United States Treasury Department of the federal government. Like zero-coupon bonds, Treasury bills don’t pay interest, but are sold at less than face value, and the buyer collects face value at maturity.
Incorrect
Treasury bills (T-bills) are short-term obligations issued by the United States Treasury Department of the federal government. Like zero-coupon bonds, Treasury bills don’t pay interest, but are sold at less than face value, and the buyer collects face value at maturity.