Fixed income

Question 1

Which product provides protection from inflation?

Answer 1

Linkers

Question 2

Eurodond

Answer 2

international bond issued outside the jurisdiction of any one country and not denominated in the currency of the country where it is issued

Question 3

Effective duration of a bond

Answer 3

EffDur=(PV_ - PV+)/2ΔCurvePV0

Question 4

Current yield

Formula

Answer 4

Coupon payment/Current price

Question 5

coupon payments are denominated in one currency and the par value is denominated in a different currency

Answer 5

dual-currency bond

Question 6

It is ______ that explains the asymmetrical price change.

Answer 6

Bond convexity

Question 7

G-spread

Answer 7

calculated as the yield difference between bond and t-bond

Question 8

indicator of liquidity in the secondary market for bonds

Answer 8

bid–offer spread

Question 9

collateralized cash lending by purchasing an underlying security now and selling it back in the future

Answer 9

Reverse repo

Question 10

The expected percentage price change for a bond

Formula

Answer 10

%ΔPFull ≈ (–AnnModDur × ΔYield) + (0.5 × AnnConvexity × (ΔYield)2)

Question 11

“Grey market”

Answer 11

trading of bonds that have not yet been issued.