Bloomberg Cours 1: Part 3 - Fixed Income Questions and Answers 2024;full solution pack

Another term for bond market - Answer-Fixed income What was the worth of the global bond market at the end of 2016 - Answer-101 Trillion What was the worth of the global stock market at the end of 2016 - Answer-65 Trillion Amount of government bonds in existence at the end of 2016 - Answer-2.1 million How much of the 101 trillion of bonds does the U.S. account for? - Answer-14 trillion Largest segment of world bond market - Answer-Sovereign debt market A shortfall of tax revenue from government spending - Answer-Budget deficit In September 2008, this large Wall Street investment bank declared bankruptcy, which led to a panic in the financial industry - Answer-Lehman Brothers Why do other countries purchase U.S. bonds? - Answer-1. To create FX reserves through the U.S. treasury 2. To sell their own currency to weaken its value U.S. government bond - Answer-Safest asset on earth The U.S. has a strong reputation for this attribute as it taxes citizens and businesses of the wealthiest nation - Answer-Credit worthinessThis term is used to describe the U.S.'s ability to print the dollar, the centralized world currency for fx and bond market - Answer-exorbitant privilege Volatility index "fear gauge." Bond yields go down as this goes up - Answer-VIX Two reasons companies borrow money on corporate bond market - Answer-1. In almost all countries, debt repayments lower a company's tax bill by reducing pre-tax profits through interest payments 2. Corporations can borrow money for longer terms from bond market than they can from bank The stated interest payment made on a bond - Answer-Coupon The amount of money borrowed - Answer-Principal Annual Percentage Rate - Answer-APR This factor of the bond makes all bonds comparable - Answer-Yield The price and yield of a bond have this relation - Answer-Inversley Bond that has no maturity date, is not redeemable, and pays a steady stream of interest indefinitely - Answer-Perpetual bond interest earned on both the principal amount and any interest already earned - Answer-Compound interest 2 Bond yield drivers - Answer-1. Credit Risk 2. Macroeconomics the probability that the borrower will fail to pay some of the interest or principal - Answer-Credit riskcreditors who don't invest in government bonds due to credit worthiness - Answer-bond vigilantes Due to the nature of credit worthiness, the bond market installs the attribute on governments looking to borrow - Answer-fiscal discipline