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FINRA SIE exam final update Questions and
Answers |With 100% Verified Solutions |
Updated & Verified |
What yield never changes - ✔ANASWER✔-Nominal Yield What
yield continuously changes - ✔ANASWER✔-current yield What
risk do treasury bonds NOT have - ✔ANASWER✔-
Credit Risk
Investment Grade Bonds for Standard and Poor -
✔ANASWER✔-AAA
AA
A
BBB
Investment Grade for Moodys - ✔ANASWER✔-Aaa
Aa
A
Baa
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Speculative grade (junk bonds) for both Standard and
Moodys - ✔ANASWER✔-Standard: BB, B, CCC
Moody: Ba, C, Caa, ca
Adjustment ranking for Standard and Poor - ✔ANASWER✔-+
is better than none
Adjustment ranking for Moodys - ✔ANASWER✔-1-3, A1 is
better than A3
What bonds do not have interest rate risk -
✔ANASWER✔-Variable rate bonds, interest rate is reset
periodically
Example of Prepayment Risk - ✔ANASWER✔-if interest rates
fall and people refinance, Mortgage Backed security investor
received principal back sooner
Bearer Bonds - ✔ANASWER✔-Physical bonds with no record
of the owner
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Fully Registered bonds - ✔ANASWER✔-bonds with interest
and principal payments are tracked/registered in
BOOK ENTRY
Bond Indenture - ✔ANASWER✔-defines interest rate, maturity,
collateral, call/put provisions and other features Trust Indenture
Act of 1939 - ✔ANASWER✔-All corporate issues of
$50,000,000 or more must have trust indenture
Cash settlement for bonds - ✔ANASWER✔-occurs same day if
done before 2:30 pm ET
Open End indenture - ✔ANASWER✔-gives bond issuers the
right to sell more bonds with the same real estate backing them
Equipment trust certificates - ✔ANASWER✔-equipment as
collateral; Serial bonds issue
; issuer pays portion of the principle every year instead of once
at end
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Collateral Trust Certificate - ✔ANASWER✔-Unsecured
Types of Unsecured Debt - ✔ANASWER✔-Commercial Paper,
Debentures, subordinate debentures, Guaranteed bonds, income
bonds
commercial paper - ✔ANASWER✔-Max 270 days, sold in large
units, backed by promise only, no coupon payments
Debentures - ✔ANASWER✔-unsecured bonds backed only by
the credit worthiness of the bond issuer
Subordinated Debentures - ✔ANASWER✔-Holders paid after
creditors, but ahead of equity holders
Guaranteed bonds - ✔ANASWER✔-parent company
guaranteeing payment
FINRA SIE exam final update Questions and
Answers |With 100% Verified Solutions |
Updated & Verified |
What yield never changes - ✔ANASWER✔-Nominal Yield What
yield continuously changes - ✔ANASWER✔-current yield What
risk do treasury bonds NOT have - ✔ANASWER✔-
Credit Risk
Investment Grade Bonds for Standard and Poor -
✔ANASWER✔-AAA
AA
A
BBB
Investment Grade for Moodys - ✔ANASWER✔-Aaa
Aa
A
Baa
,2 | Page
Speculative grade (junk bonds) for both Standard and
Moodys - ✔ANASWER✔-Standard: BB, B, CCC
Moody: Ba, C, Caa, ca
Adjustment ranking for Standard and Poor - ✔ANASWER✔-+
is better than none
Adjustment ranking for Moodys - ✔ANASWER✔-1-3, A1 is
better than A3
What bonds do not have interest rate risk -
✔ANASWER✔-Variable rate bonds, interest rate is reset
periodically
Example of Prepayment Risk - ✔ANASWER✔-if interest rates
fall and people refinance, Mortgage Backed security investor
received principal back sooner
Bearer Bonds - ✔ANASWER✔-Physical bonds with no record
of the owner
,3 | Page
Fully Registered bonds - ✔ANASWER✔-bonds with interest
and principal payments are tracked/registered in
BOOK ENTRY
Bond Indenture - ✔ANASWER✔-defines interest rate, maturity,
collateral, call/put provisions and other features Trust Indenture
Act of 1939 - ✔ANASWER✔-All corporate issues of
$50,000,000 or more must have trust indenture
Cash settlement for bonds - ✔ANASWER✔-occurs same day if
done before 2:30 pm ET
Open End indenture - ✔ANASWER✔-gives bond issuers the
right to sell more bonds with the same real estate backing them
Equipment trust certificates - ✔ANASWER✔-equipment as
collateral; Serial bonds issue
; issuer pays portion of the principle every year instead of once
at end
, 4 | Page
Collateral Trust Certificate - ✔ANASWER✔-Unsecured
Types of Unsecured Debt - ✔ANASWER✔-Commercial Paper,
Debentures, subordinate debentures, Guaranteed bonds, income
bonds
commercial paper - ✔ANASWER✔-Max 270 days, sold in large
units, backed by promise only, no coupon payments
Debentures - ✔ANASWER✔-unsecured bonds backed only by
the credit worthiness of the bond issuer
Subordinated Debentures - ✔ANASWER✔-Holders paid after
creditors, but ahead of equity holders
Guaranteed bonds - ✔ANASWER✔-parent company
guaranteeing payment
