Debt Securities

Question 1

Which of the following statements is true regarding income bonds?

A. They pay semi Anual interest

B. They may not return 100% of principal at maturity.

C. They are typically issued by security companies.

Answer 1

B. they may not return 100% at maturity.

Question 2

if interest rates are declining, which of the following would be expected?

A. Discount Bonds will appreciate more than premium bonds.

B. Premium bonds will appreciate more than discount bonds.

C. All bonds will depreciate equally

Answer 2

A. Discount Bonds will appreciate more than premium bonds.

Question 3

Which of the following trade with accrued interest?

A. Zero coupon obligations

B. Treasury Bills

C. Certificates of deposit

Answer 3

C. Certificate of deposit

Question 4

In a regular way delivery of municipal bonds, accrued interest is computed

A. Up and including the settlement date

B Up to but nit including the trade date

C. Up to but NOT including the settlement date

Answer 4

C. Up to but NOT including the settlement date.

Question 5

Which of the following represent funded debt?

A. U.S Treasury note
B. Municipal Bond
C. Corporate mortgage bond

Answer 5

C. Corporate mortgage Bond.

Question 6

What is a key factor that determines which CMO trances receive principal payment from mortgages?

A. Randomly Selected.
B. By maturity date
C. By interest Rate

Answer 6

B. By maturity

Question 7

The primary difference between YTM and CY is

A. YTM uses coupe rate and CY does not.

B. YTM uses time remaining until maturity CY does not.

C. CY uses time remaining until maturity. YTM does not.

Answer 7

B.YTM uses time remaining until maturity CY does not.