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Question 1 of 10
1. Question
The true abbreviation for STRIPS is which of the following:
Correct
Separate Trading of Registered Interest and Principal Securities (STRIPS) Long-term notes and bonds divided into principal and interest-paying components, which may be transferred and sold in amounts as small as $1000.
Incorrect
Separate Trading of Registered Interest and Principal Securities (STRIPS) Long-term notes and bonds divided into principal and interest-paying components, which may be transferred and sold in amounts as small as $1000.
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Question 2 of 10
2. Question
TIPS is adjusted to reflect changes in which of the following:
Correct
Every six months, the interest rate paid on TIPS is adjusted to reflect changes in the Consumer Price Index (CPI). When inflation is rising, the interest payment paid on TIPS rises; if the CPI were to drop,interest payments would be lowered.
Incorrect
Every six months, the interest rate paid on TIPS is adjusted to reflect changes in the Consumer Price Index (CPI). When inflation is rising, the interest payment paid on TIPS rises; if the CPI were to drop,interest payments would be lowered.
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Question 3 of 10
3. Question
Yield to maturity is also known as:
Correct
Yield to maturity is also called basis. If the bondholder bought the bond on the market, the yield to maturity (YTM) will depend on whether he bought the bond at a discount or at a premium
Incorrect
Yield to maturity is also called basis. If the bondholder bought the bond on the market, the yield to maturity (YTM) will depend on whether he bought the bond at a discount or at a premium
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Question 4 of 10
4. Question
Which of the following term is related to the lowest possible yield for a bond without the issuer defaulting is:
Correct
Yield to worst (YTW) is the lowest possible yield for a bond without the issuer defaulting. It is obtained by calculating the YTM and the YTC for all the call dates and selecting the lowest.
Incorrect
Yield to worst (YTW) is the lowest possible yield for a bond without the issuer defaulting. It is obtained by calculating the YTM and the YTC for all the call dates and selecting the lowest.
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Question 5 of 10
5. Question
Which of the following statement is true regarding the assumption for the calculation of discount yield for months and yearrs:
Correct
The calculation for discount yield assumes 30-day durations for months and 360-day durations for years. The discount yield of a bond is the return to a bondholder for short-term bonds and T-bills sold at a discount.
Incorrect
The calculation for discount yield assumes 30-day durations for months and 360-day durations for years. The discount yield of a bond is the return to a bondholder for short-term bonds and T-bills sold at a discount.
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Question 6 of 10
6. Question
Which of the following relates to the purchases mortgages issued by banks and purchases mortgages issued by thrift simultaneously:
Correct
The main difference between the two is that Fannie generally purchases mortgages issued by banks whereas Freddie generally purchases mortgages issued by
thrifts (i.e. savings and loan associations). Fannie Mae (and thus called Fannie’s “little brother”).Incorrect
The main difference between the two is that Fannie generally purchases mortgages issued by banks whereas Freddie generally purchases mortgages issued by
thrifts (i.e. savings and loan associations). Fannie Mae (and thus called Fannie’s “little brother”). -
Question 7 of 10
7. Question
Fannie Mae is a publicly-traded company aimed at increasing homeownership among Americans with low to middle incomes by expanding the secondary mortgage market. It is associated with which of the following:
Correct
Fannie generally purchases mortgages issued by banks, Fannie Mae is the Federal National Mortgage Association, or FNMA. It is a publicly-traded company aimed at increasing homeownership among Americans with low to middle incomes by expanding the secondary mortgage market.
Incorrect
Fannie generally purchases mortgages issued by banks, Fannie Mae is the Federal National Mortgage Association, or FNMA. It is a publicly-traded company aimed at increasing homeownership among Americans with low to middle incomes by expanding the secondary mortgage market.
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Question 8 of 10
8. Question
Which of the following is a a publicly-traded company that manages student loans, both by providing them and by buying them from other lenders is:
Correct
Sallie Mae is the Student Loan Market Association or SLMA. It is a publicly-traded company that manages student loans, both by providing them and by buying them from other lenders.
Incorrect
Sallie Mae is the Student Loan Market Association or SLMA. It is a publicly-traded company that manages student loans, both by providing them and by buying them from other lenders.
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Question 9 of 10
9. Question
All tranches receive interest payments every month, but only one tranche at a time receives principal payments is true for which of the following:
Correct
Collateralized mortgage obligations (CMOs) are issued by private financial institutions. They are bundles of private mortgages, much like the pass-throughs that are put together by the various federal agencies. In a standard CMO, all tranches receive interest payments every month, but only one tranche at a time receives principal payments.
Incorrect
Collateralized mortgage obligations (CMOs) are issued by private financial institutions. They are bundles of private mortgages, much like the pass-throughs that are put together by the various federal agencies. In a standard CMO, all tranches receive interest payments every month, but only one tranche at a time receives principal payments.
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Question 10 of 10
10. Question
Mortgages are bundled by maturity dates into groups is known as:
Correct
Mortgages are bundled by maturity dates into groups is called Tranches
Incorrect
Mortgages are bundled by maturity dates into groups is called Tranches