Bond trading process Flashcards
True or false. Public placement to a small group of investors which are frequently financial institutions
False. private placement
True or false. Public offering using an investment bank as a security underwriter
True
True or false. The bank guarantees the firm a price for the whole lot of secondly issued bonds by paying the bid price at a discount from par and reselling to investors at an offer price which is a lower price
False. The bank guarantees the firm a price for the whole lot of newly issued bonds by paying the bid price at a discount from par and reselling to investors at an offer price which is a higher price
True or false. The underwriter does not guarantees to purchase all the securities offered for sale by the issuer regardless of whether they can sell them to investors.
False. they guarantees to purchase all the securities
True or false. In bond trading process, firm commitment underwriting is the only available arrangement
false. Competitive sale, negotiated sale, and best effort underwriting basis also exists
True or false. Best effort underlying basis refers to any broker dealer or dealer bank may bid on the bonds at the designated date and time
False. Competitive sale
true or false. Competitive sale is when the bonds are awarder to the bidder offering the lowest interest cost
true
True or false. Best effort underlying basis is a legal agreement between an underwriter and a bond issuer whereby the underwriter agrees to do the best it can to sell as many as possible to the public
true
True or false. Firm commitment underwriting does not guarantee that all of the securities in the issue must be sold
false. best effort underlying basis
True or false. The foreign exchange market is a gloabl decentralized or over-the-counter market for the trading of securities
true
True or false. Interest rate is the price of one’s country’s currency expressed in terms of another country’s currency
false. exchange rate
True or false. A country with lower inflation rate than another’s will see a depression in the value of its currency
false. A country with lower inflation rate than another’s will see an appreciation in the value of its currency
True or false. A country with a constantly lower inflation rare exhibits a rising currency value while a country with a higher inflation typically sees depreciation in its currency and is usually accompanied by a higher interest rate
true
True or false. Increases in interest rates cause a country’s currency to depreciate
false. it causes a country’s currency to appreciate
True or false. The higher the interest rates provides a higher interest rates to lenders thereby attracting more foreign capital which causes a rise in exchange rates
true
