WALL STREET PREP: BONDS CRASH COURSE QUESTIONS AND ANSWERS 2024

WALL STREET PREP: BONDS
CRASH COURSE QUESTIONS AND
ANSWERS 2024




What is the focus of the course? - <<<ANSWER>>>analysis of
debt


Where does demand for bonds come from? -
<<<ANSWER>>>Demand comes from governments,
corporations, and households.


What are Fixed income securities? - <<<ANSWER>>>Fixed
income securities: financial instruments that require the
borrower to pay a predetermined amount to the holder of the
security in exchange for capital upfront.

, Example of a fixed income security -
<<<ANSWER>>>Example: a corporation needs to borrow
$5,000,000. Corporation will issue a fixed income security.
Owners of securities, such as investors, now have the right to
receive predetermined amounts in exchange for giving that
$5,000,000 upfront.


What are the 2 broad types of debt? - <<<ANSWER>>>Bonds
and Loans


What do the government, households, and corporations use to
borrow? - <<<ANSWER>>>- Government borrows primarily
with bonds
- Corporations use primarily both
- Households: borrow with loans, which sometimes may get
turned into securitized bonds


Debt from non-financial corporations - <<<ANSWER>>>Non-
financial corporations: The US is most heavily weighted towards
corporate bonds.


Debt from households - <<<ANSWER>>>Household debt: The
US is most heavily weighted towards securitization, while
traditional bank loans dominate elsewhere.