Fixed Income.docx

窗体顶端Fixed Income1 of24Using the following information and assuming coupons are paid annually, the G-spread of the Steel Co. bond isclosestto:BondMaturityCouponPriceSteel Co.2 Years5.00%101.70Treasury bond2 Years4.00%100.50A. 94 bps.B. 100 bps.C. 36 bps.2 of24A junk bond ismost likelya:A .bond with credit rating above BBB.B. high-yield bond.C. supranational bond.3 of24Which of the following statements isleastaccurate regarding the factors that affect the interest rate risk characteristics of an option-free bond?A. The longer the bonds maturity, the greater the bonds price sensitivity to changes in interest rates.B .The lower the coupon rate, the greater the bonds price sensitivity to changes in interest rates.C. The higher the yield, the greater the bonds price sensitivity to changes in interest rates.4 of24Which type of fixed-income security ismost likelyto have coupon payments that reset periodically?A. Convertible bondsB. Floating-rate notesC. Callable bonds5 of24The maturity effect isleast likelyto hold for a:A. low-coupon, long-term bond trading at a discount.B .low-coupon, long-term bond trading at a premium.C. zero-coupon bond.6 of24Which of the following isleast likelyto be a form of internal credit enhancement associated with a corporate bond issue?A. Debt overcollateralizationB Debt subordinationB. Letter of credit7 of24Which of the following 90-day money market instrumentsmost likelyoffers the investor the highest rate of return?Money Market InstrumentQuoted RateQuotation BasisDay ConventionInstrument A5.78%360Discount rateInstrument B5.80%365Discount rateInstrument C5.96%365Add-on rateInstrument AInstrument CInstrument B8 of24Which of the following embedded optionsmost likelyprovides a right to the issuer?Put featureCall featureConversion provision9 of24The Zera Company has borrowed capital by issuing a number of different securities. Which of the followingmost likelyranks the highest with respect to priority of payments?Senior unsecured bondThird lien debtSubordinate loan10 of24The bonds of Apex Corporations have a par value of $10,000 each and an annual required rate of return of 10%. The bonds make quarterly coupon payments at an annual rate of 6% and have two years remaining until maturity. The current market price of each bond isclosestto:$10,749.$9,283.$9,306.11 of24ABL Ltd. is an Australian company that has financed a joint venture project in Singapore using a 15-year, fixed-rate bond paying semi-annual coupons that are denominated in Singapore dollars. The bonds par value, to be paid at maturity, is denominated in U.S. dollars. This bond is an example of a:global bond.currency option bond.dual-currency bond.12 of24Which of the following factors willmost likelydrive the repo margin lower?Lower credit quality of the counterpartyShorter supply of the collateralLower quality of the collateral13 of24Which one of the following isleast likelyto be an example of a Eurobond?A U.K.-based company issuing Japanese yen-denominated bonds to investors domiciled in JapanA Japanese company issuing euro-denominated bonds to investors domiciled in the United KingdomAn Australian company issuing U.S. dollar-denominated bonds to investors domiciled in Japan14 of24The current yield for a 4.5% coupon, 10-year bond, with a maturity par value of $100 and currently priced at $85.70 isclosest to:4.50%.5.93%.5.25%.15 of24Which type of bond ismost likelyto be preferred by investors in a falling interest rate environment?A floored floating-rate noteA floating-rate note with no cap or floorA capped floating-rate note16 of24When compared with an option-free bond, which type of bondmost likelyoffers a higher yield to bondholders?ConvertiblePutableCallable17 of24Zet Bank has entered into a contract with Louly Corporation in which Zet agrees to buy a 2.5% U.S. Treasury bond maturing in 10 years and promises to sell it back next month at an agreed-on price. From Zet Banks perspective, this contract isbestdescribed as a:repo.collateralized loan.reverse repo.18 of24In using matrix pricing to estimate the required yield spread on a new corporate bond issue, the benchmark rate used ismost likelyto be the:yield to maturity on a government bond with a similar time to maturity.yield to maturity on a corporate bond with similar credit risk and time to maturity.coupon rate on a government bond with a similar time to maturity.19 of24The duration and convexity of an option-free bond priced at $90.25 are 10.34 and 151.60, respectively. If yields increase by 200 bps, the percentage price change isclosest to:17.65%.23.71%.20.68%.20 of24Which of the following isleast likelyto be a negative covenant associated with a coupon-paying corporate bond issue?A prohibition from investing in long-term projects in emerging market countriesA requirement to hedge at least 50% of the firms revenues generated from foreign salesA requirement to pay withholding taxes to foreign governments in a timely manner21 of24Eldora Ltd. recently issued deferred-coupon bonds for which no coupon payments will be paid in the first two years of the bonds life. Regular annual coupon payments at a rate of 9% will then be made until the bonds mature at the end of six years. The spot rates for various maturities are given in the following table.Time to MaturitySpot Rate1 year8.0%2 years7.5%3 years7.0%4 years6.5%5 years6.0%6 years5.5%On the basis of these spot rates, the price of the bond today isclosestto:100.12.116.24.108.20.22 of24DMT Corp. issued a five-year floating-rate note (FRN) that pays a quarterly coupon of three-month LIBOR plus 125 bps. The FRN is priced at 96 per 100 of par value. Assuming a 30/360 day-count convention, evenly spaced periods, and constant three-month LIBOR of 5%, the discount margin for the FRN isclosestto:400 bps.221 bps.180 bps.23 of24The bonds of Whakatane and Co. are priced for settlement on 15 July 2014 and have the followin