Unit 12 Flashcards
The yield curve often inverts when interest rates are (high/low) but are expected to (fall/rise) in the near future.
high - fall
When a mutual fund share is redeemed, the fund must pay the investor within __ days of receipt of the redemption.
7
Which security is sold with a markup?
Fixed income securities i.e. bonds
Bonds with longer maturities have (more/less) interest rate risk than bonds with shorter maturities.
more
Do municipal bond transactions take place on an exchange?
No
Current yield is based on the bond’s _________________
current market price
Current yield calculation
Annual Interest ÷ Current Market Price
A _____________ bond is a U.S.-dollar denominated bond issued by an overseas company and held in a foreign institution outside both the U.S. and the issuer’s home country
Eurodollar
Which bond is more likely to be called:
A bond that is trading BELOW par value or a bond trading ABOVE par value
A bond trading above par value
If the Consumer Price Index (CPI) decreased by a greater rate than the yield on your investment, the purchasing power of your invested dollars would (increase/decrease)
increase
___________ are zero-coupon bonds (long-term). Interest is automatically reinvested and compounded at the same yield and reinvestment risk is avoided.
Treasury STRIPS
Bonds with high durations and _____ coupons will be more volatile in price as interest rates change.
small
