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Reading 47 Fixed-Income Instrument Features

The document consists of a series of multiple-choice questions related to bond characteristics, covenants, and fixed income securities. It covers topics such as the definition of negative covenants, the rights of bondholders, and the classification of different types of bonds and securities. Each question is designed to test knowledge on specific aspects of bond investing and financial instruments.

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5 views4 pages

Reading 47 Fixed-Income Instrument Features

The document consists of a series of multiple-choice questions related to bond characteristics, covenants, and fixed income securities. It covers topics such as the definition of negative covenants, the rights of bondholders, and the classification of different types of bonds and securities. Each question is designed to test knowledge on specific aspects of bond investing and financial instruments.

Uploaded by

phamtrungthanh.work
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Question #1 of 11 Question ID: 1645543

Restrictions on asset sales and additional borrowings by a bond issuer are best
characterized as:

A) positive covenants.
B) affirmative covenants.
C) negative covenants.

Question #2 of 11 Question ID: 1645538

Which of the following contains the overall rights of the bondholders?

A) Covenant.
B) Indenture.
C) Rights offering.

Question #3 of 11 Question ID: 1645535

Every six months a bond pays coupon interest equal to 3% of its par value. This bond is
a:

A) 3% semiannual coupon bond.


B) 6% annual coupon bond.
C) 6% semiannual coupon bond.

Question #4 of 11 Question ID: 1645536


Which of the following fixed income securities is classified as a money market security?

A) Newly issued security that will mature in one year.


B) Security issued 18 months ago that will mature in six months.
C) Security issued six months ago that will mature in one year.

Question #5 of 11 Question ID: 1645541

Which of the following bond covenants is considered negative?

A) Maintenance of collateral.
B) No additional debt.
C) Payment of taxes.

Question #6 of 11 Question ID: 1645539

A bond's indenture least likely specifies the:

A) identity of the lender.


B) covenants that apply to the issuer.
C) source of funds for repayment.

Question #7 of 11 Question ID: 1645540

Features specified in a bond indenture least likely include the bond's:

A) coupon rate and maturity date.


B) issuer and rating.
C) par value and currency.
Question #8 of 11 Question ID: 1645542

A covenant that requires the issuer not to let the insurance coverage lapse on assets
pledged as collateral is an example of a(n):

A) affirmative covenant.
B) inhibiting covenant.
C) negative covenant.

Question #9 of 11 Question ID: 1645533

Assuming bond yields are greater than zero, which of the following statements about
zero-coupon bonds is least accurate?

A) A zero coupon bond may sell at a premium to par when interest rates decline.
B) All interest is earned at maturity.
C) The lower the price, the greater the return for a given maturity.

Question #10 of 11 Question ID: 1645537

An analyst observes a 5-year, 10% coupon bond with semiannual payments. The face
value is £1,000. How much is each coupon payment?

A) £100.
B) £50.
C) £25.

Question #11 of 11 Question ID: 1645534

A bond is trading at a premium if its:


A) price is greater than its par value.
B) redemption value is greater than its face value.
C) yield is greater than its coupon rate.

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