Fixed Income Test 1 (Answered) 2022

Fixed Income Test 1 (Answered) 2022 The US debt market is larger than the US equity market? T/F True All of the following are differentiating factors of fixed income securities versus equity securities except for: Fixed claim Higher priority on cash flows Tax deductibility by issuer Infinite Life Infinite Life A bond's CUSIP is defined as: A) A unique nine digit number to identify individual bonds B) A number assigned by the SEC to all registered bond offerings Only A is correct All of the following are differences in how bond trade versus equities except: Equities generally trade at a wider spread differential Bonds trade in a more opaque market (less pricing data readily available) Minimum trading sizes for equities are smaller Equities tend to more often be traded on electronic exchanges Equities generally trade at a wider spread differential In terms of returns, bond investors who buy and intend to hold a bond to maturity are primarily focused: A) Price appreciation B) Principal return and income yield Only A is correct Only B is correct A and B are both correct Neither A nor B are correct Only B is correct All of the following are examples of Fixed Income asset classes except: Convertibles High Yield Interest Rate Options RMBS Interest Rate Options A bond's indenture: is the same as a debenture. contains its covenants. relates only to its interest and principal payments. contains its covenants Which of the following bond covenants is most accurately described as an affirmative covenant? The bond issuer must not: violate laws or regulations. issue more debt with the same or higher seniority. sell assets pledged as collateral. Violate laws or regulations A pure-discount bond: always sells at par. pays interest on a regular basis (typically semi-annually). does not pay interest on a regular basis. does not pay interest on a regular basis Which of the following statements is most accurate with regard to floating-rate issues that have caps and floors? A floor is an advantage to both the issuer and t