Bonds

Question 1

Muni bonds settle __, accrued interest ends ___, & is based on __

Answer 1

T+1; day before settlement; 30/360

Question 2

When a bond issued calls bonds after the call protection period, the issuer ___

Answer 2

Is making an optional call.

Question 3

Any communication or posts made to a firm’s site by a 3rd party are ___ from FINRA communication rules, UNLESS the firm is involved in ____ the content in some way.

Answer 3

Exempt; creating or shaping (editing)

Question 4

MSRB regulates 1) muni __ 2) muni___ 3)__ dealers

Answer 4

1) Brokers
2) dealers
3) bank

Question 5

The nominal interest rate on a TIPS approximated the ___

Answer 5

Real interest rate

Question 6

Companies can force convertible bond holders to ___

Answer 6

convert their convertible bonds to stocks.

Question 7

A conversion ratio of 20 means you can trade ___

Answer 7

1 bond at par for 20 stocks.

Question 8

____ must submit official statements & other relevant docs to EMMA.

Answer 8

Primary municipal offering underwriters

Question 9

Municipal issues aren’t subject to ____ requirements but must register with ___.

Answer 9

State registration; MSRB

Question 10

A municipality will solicit bids from interested persons for a ___ issue by publishing an ____.

Answer 10

New bond; official notice of sale

Question 11

For bonds purchased at a discount, YTM is ___.

Answer 11

more than CY.

Question 12

Eurodollar bonds are 1) denominated in ___ 2) sold ____ 3) Non-issuers of Eurodollar bonds are subject to ___.

Answer 12

1) USD only
2) all over the world & USA
3) foreign currency risk

Question 13

___ is issued at a discount to face value; is like a zero coupon bond from the USA aka ___.

Answer 13

Original Issue Discount (OID) muni bond; STRIPS

Question 14

BDs report corporate bond transactions to the ____

Answer 14

Trade Reporting & Compliance Engine (TRACE).

Question 15

Yield spreads-as measured by the difference in yields between high-yield (“junk”) bonds & ___ bonds-widening is ___.

Answer 15

Treasury; negative economic indicator.

Question 16

Muni’s collection ratio =

Answer 16

Taxes collected/taxes assessed

Question 17

Most complete info about a muni bond’s call provisions would be found in ___

Answer 17

The bond resolution.

Question 18

A bond guaranteed by another corporation is a __.

Answer 18

Guaranteed corporate bond.

Question 19

YTC=

Answer 19

Net annual return/Average value

Question 20

The current yield of a bond __ as bond market prices __

Answer 20

Increases; decreases

Or Visa versa

Question 21

The discount __ be accreted over the life of ___ corporate bonds.

Answer 21

Must; original issue discount

Question 22

A new issue muni bond is purchased by a customer. Years later, the issuer calls the bond. This is known as ___.

Answer 22

Redemption

Question 23

___ occurs when an issuer sells new bonds at an issue’s maturity date and uses proceeds to redeem the maturing bonds (so issuer is rolling over debt).

Answer 23

Refunding

Question 24

___ occurs when an issuer sells new bonds and uses the proceeds to “escrow” an existing issue prior to its redemption date with cash, governments or agencies. This makes the old issue “self supporting” and frees up the issuer to sell new bonds at lower current market rates.

Answer 24

Prerefunding

Question 25

Muni bond premiums must be ___, whether the bond is bought as a new issue ___.

Answer 25

Amortized; or on the secondary market

Question 26

____ bonds give a 80% tax deduction on interest to ___ that purchase it.

Answer 26

Bank qualified municipal; banks

Question 27

Muni bond trade confirmation includes 1) ___ capacity 2) ___ name 3) __ interest

Answer 27

1)Agency or principal
2) broker dealer
3) accrued

Question 28

The calculation of accrued interest on a Treasury bond is based on __ with settlement on ___

Answer 28

Actual day/actual year; T+1

Question 29

Bonds purchased at a premium are ___, while bonds purchased at a discount are ___.

Answer 29

Amortized; accreted