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Mock Test 2 — Topic 6: Fixed Income

Kết quả: 11/23 (48%) Nguồn: SAPP CFA1 Revision Mock Test 2 Liên kết: Fixed Income

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Câu 93

Question 93: MDL Corporation’s debt is rated B+ by S&P. Which of the following statements about MDL’s debt is most accurate?

(A) MDL currently has the capacity to meet its financial obligations.

(B) Default on the debt has not yet occurred, but is likely to occur shortly.

(C) A one-notch upgrade would move the debt from high yield to investment grade.

Câu 100

Question 100: An important difference between a covered bond and an ABS backed by the same bank loans is that:

(A) principal is repaid sooner with covered bonds than with ABS.

(B) covered bonds provide better credit protection to the buyer than ABS.

(C) issuing covered bonds reduces the reserves a bank must hold to back its loans, compared to issuing ABS.

Câu 105

Question 105: Bond X is a 4% coupon, 5-year bond trading at par. Bond Y is identical to Bond X in all respects except that Bond Y has an embedded put option. Bond Y will have a:

(A) lower effective duration than Bond X and will have positive effective convexity.

(B) lower effective duration than Bond X and will have negative effective convexity.

(C) higher effective duration than Bond X and will have positive effective convexity.

Câu 108

Question 108: A 210-day certificate of deposit investment of $48.3 million will produce a redemption amount at maturity of $50 million. The add-on yield of the certificate of deposit, assuming a 365-day year, is closest to:

(A) 3.5%.

(B) 5.9%.

(C) 6.1%.

Câu 112

Question 112: Consider a 10-year zero-coupon bond with a yield-to-maturity on a semiannual basis of 6.5%. The money duration of this bond per 100 of face value is closest to:

(A) 510.

(B) 530.

(C) 550.

Câu 115

Question 115: The lowest-cost source of short-term funding for a large creditworthy company is:

(A) factoring of receivables.

(B) issuing commercial paper.

(C) an uncommitted line of credit.

Câu 119

Question 119: Trudd Corporation recently issued a 4% fixed-coupon 10-year senior unsecured bond. The bond currently has a credit spread of 70 bp relative to a 10-year benchmark bond. A bond investor estimates the bond has a 4% probability of default and a loss given default of 20%. Should the investor buy this bond?

(A) No.

(B) Yes, because the credit spread fairly compensates for assuming its credit risk.

(C) Yes, because the credit spread more than fairly compensates for assuming its credit risk.

Câu 123

Question 123: For three otherwise identical bonds, which feature would result in the largest increase in value during a period of rising interest rate volatility?

(A) Put feature.

(B) Call feature.

(C) Floating rate coupon.

Câu 124

Question 124: Unlike the loans underlying agency mortgage-backed securities, the loans underlying commercial mortgage-backed securities:

(A) may be recourse loans.

(B) often include call protection.

(C) have maximum loan-to-value requirements.

Câu 130

Question 130: An investor holds a high-yield bond during an economic contraction that decreases the risk-free benchmark yield. Other things equal, in this scenario the bond’s analytical duration will most likely be:

(A) less than an empirical duration estimate.

(B) greater than an empirical duration estimate.

(C) approximately equal to an empirical duration estimate.

Câu 134

Question 134: Samuelson Company has two bond issues outstanding. One is a zero coupon bond. The other has a 10% semiannual coupon. Both bonds have AA credit ratings, 10 years to maturity, and yields to maturity of 7.5%. The zero coupon bond has:

(A) less reinvestment risk and less interest rate risk than the coupon paying bond.

(B) more reinvestment risk and less interest rate risk than the coupon paying bond.

(C) less reinvestment risk and more interest rate risk than the coupon paying bond.

Câu 139

Question 139: Recently issued government bonds that trade frequently are least likely referred to as:

(A) benchmark bonds.

(B) on-the-run bonds

(C) current yield bonds.

Câu 141

Question 141: An annual-pay bond with a modified duration of 7.61 is priced with a yield-to-maturity of 7.5%. If an investor has an expected holding period for the bond of 8 years, an investment in this bond will have [[fixed-income/glossary/fi-m10#Reinvestment risk|reinvestment risk]] that:

(A) is less than its price risk.

(B) just offsets its price risk.

(C) is greater than its price risk.

Câu 145

Question 145: A $50,000 10-year 7% bond with semi-annual coupon payments is issued on January 1, 20X0. The full price for a trade of this bond, with a 7% yield tomaturity to settle on April 30, 20X6, using the 30/360 day-count convention, is closest to:

(A) $51,160.

(B) $51,164.

(C) $51,167.

Câu 146

Question 146: An annual-pay 5% coupon corporate bond with two years to maturity is trading with a zero-volatility spread of 150 basis points. The 1-year government bond spot rate is 3.5%, and the 2-year government bond spot rate is 4.0%. The price of the corporate bond (as a percent of par) is closest to:

(A) 99.10.

(B) 99.55.

(C) 101.90.

Câu 153

Question 153: A floating-rate note that uses 6-month LIBOR as a reference rate has a quoted margin of +25 basis points and a required margin of +15 basis points. At its next coupon reset date, the note’s price is most likely to be:

(A) equal to par value.

(B) less than par value.

(C) greater than par value.

Câu 160

Question 160: A bond for which the holder has a legal claim on specific financial assets as well as the overall assets of the issuing corporation is most appropriately termed:

(A) a secured bond.

(B) a covered bond.

(C) an asset-backed security.

Câu 163

Question 163: A three-year annual-pay euro-denominated bond pays an annual coupon of 3%. Current euro spot rates are: 1 yr. 2.5% 2 yr. 3.0% 3 yr. 4.0% The value of the bond per €100 of face value is closest to:

(A) 95.6.

(B) 97.3.

(C) 99.6.

Câu 165

Question 165: Rob Ealey purchases an option-free bond with a 6.5% coupon that is currently selling at 94.73 to yield 7.25%. If yields increase by 50 basis points, the new price of the bonds would be 91.41, and if yields decrease by 50 basis points, the new price of the bond would be 98.20. If yields decrease by 75 basis points, the price of the bond would be closest to:

(A) 89.64.

(B) 99.82.

(C) 104.92.

Câu 170

Question 170: For a corporate bond, it is most likely that a decrease in its bond rating will:

(A) be preceded by a decrease in price.

(B) increase expected loss severity.

(C) be followed by a decrease in the bond’s credit spread.

Câu 171

Question 171: A bond currently trading at a yield-to-maturity of 7.8% is priced at 101.7 per $100 of face value. If the yield falls to 7.5% the bond will trade at 104.4 and if the yield increases to 8.1% the bond will trade at 99.1. The approximate convexity of this bond is:

(A) 98.25.

(B) 109.25

(C) 112.25.

Câu 174

Question 174: Which of the following statements about an inverted bond yield curve of an issuer is most accurate?

(A) Investors perceive longer-maturity bonds to have greater risk.

(B) The shorter the bond maturity, the lower the YTM

(C) An investor who wants the highest YTM bond should purchase the shortest maturity bond.

Câu 177

Question 177: In securitization, the party that purchases the loans is least likely:

(A) the issuer.

(B) the servicer.

(C) a special purpose entity.

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