Cfa Level 1 Fixed Income Exam Questions With 100% Correct And Verified Answers 2025

Cfa Level 1 Fixed Income Exam
Questions With 100% Correct And
Verified Answers 2025
BondiIndenturei-iCORRECTiANSWERS-
Contractithatispecifiesiallitheirightsiandiobligationsiofitheiis
sueriandiownersiofiaifixediincomeisecurity.

NegativeiCovenantsi-iCORRECTiANSWERS-
Prohibitionsionitheiborrower.

AffirmativeiCovenantsi-iCORRECTiANSWERS-
Actionsithatitheiborroweripromisesitoiperform.

MaturityioriTermitoiMaturityi-iCORRECTiANSWERS-
Lengthiofitimeiuntililoanicontractioriagreementiexpires.iRe
mainingilifeiofibond.

PariValuei-iCORRECTiANSWERS-
Amountiborroweripromisesitoipayionioribeforeimaturityidate
.

CouponiRatei-iCORRECTiANSWERS-
RateiwhenimultipliedibyiPariValueigivesiamountiofiannualiin
terestipayment.

Zero-CouponiBondsi-iCORRECTiANSWERS-
Bondsithatidoinotipayiinterest;iInsteadisoldiatiaideepidiscou
ntifromiparivalues.iMarketiconventionistatesisemi-
annualicompoundingiusediwhenipricingizeros.

Non-AmortizingiBondi(BulletiBondioriBulletiMaturity)i-
iCORRECTiANSWERS-CharacteristiciofimostiT-

BondsiandiCorporateibonds.iPayionlyiinterestiuntilimaturity,
iatiwhichitimeifullifaceivalueiisipaidiback.




vendarsol

,BulletiBondsi-iCORRECTiANSWERS-
Payientireiprincipaliinioneilumpisumiatimaturity.

SerialiBondsi-iCORRECTiANSWERS-
Payioffiprincipalithruiseriesiofipmtsioveritime.

AmortizingiSecuritiesi-iCORRECTiANSWERS-
Makeiperiodiciprincipaliandiinterestipmtsi(i.e.,iMBSi&iABS).

SinkingiFundiProvisionsi-iCORRECTiANSWERS-
Provideiforitheiretirementiofiaibondithruiaiseriesiofipredefin
ediprincipalipmtsioveritheilifeiofitheiissue.

Sinking-FundiProvisionsi-iCORRECTiANSWERS-
CashiPaymenti-
iissueridepositsicashiwithitrusteeiwhoiretiresiapplicableiprop

ortioniofibondsiatipariusingilotteryiselection.
DeliveryiofiSecuritiesi-
iissueripurchasesitheibondsiwithiequalitotaliparivalueiinithei

marketiandideliversithemitoitrusteeiwhoiwilliretireithem.

Investorioptionsi-iCORRECTiANSWERS-
Conversionifeatures,iputiprovisions,iandifloors.

Issuerioptionsi-iCORRECTiANSWERS-
Calliprovisions,iprepaymentioptions,isinkingifundiprovisions
,iandicaps.

CallableiBondiProvisionsi-iCORRECTiANSWERS-
Issuerihasirighti(notiobligation)itoiretireiallioripartiofibondip
rioritoimaturity.iThereimayibeiseveralicallidates,iandicustom
arilyiwheniaibondiisicalledionitheifirstipermissibleicallidate,it
heicallipriceiisiaboveiparivalue.iTheicallipriceiwillinormallyid
eclineioveritimeiaccordingitoitheischedule.

DoublingiOptioni-iCORRECTiANSWERS-LikeiaiCalliOption.




vendarsol

,PutiProvisioni-iCORRECTiANSWERS-
Grantsirightitoiselli(put)itheibonditoitheiissueriatiaispecifiedi
priceiprioritoimaturity.

Wheniwouldiitibeibeneficialiforiaibondholderitoiexerciseiaipu
tioption?i-iCORRECTiANSWERS-
Ifiinterestiratesihaveiriseniand/
oritheicreditworthinessiofitheiissuerihasideterioratedisoithati
theimarketipriceiofitheibondihasifallenibelowipar.

Non-CallableiBondi-iCORRECTiANSWERS-
Absoluteiprotectioniagainsticalliprioritoimaturity.

RefundingiProvisionsi-iCORRECTiANSWERS-
Nonrefundableibondsiprohibitiprematureiretirementiofiissu
eiusingiproceedsiofiailowericpnibd.iBdsithaticarryitheseiprovi
sionsicanibeifreelyicallable,ibutinotirefundable.

Non-RefundableiBondi-iCORRECTiANSWERS-
Prohibiticalliofianiissueiusingiproceedsifromiailowericouponi
bondiissue.

ConversioniOptioni-iCORRECTiANSWERS-
Grantsibondholderirightitoiconvertibondiintoiaifixedinumberi
oficommonishares.iOptionsiaddsivalueitoibond.

ExchangeiOptioni-iCORRECTiANSWERS-
Similaritoiconversionioption,ibutiallowsiconversioniintoiaisec
urityiotherithanicommonistock.

FloatingiRateiSecuritiesi-iCORRECTiANSWERS-
Bondsithatipayiaivariableirateiofiinterest.

CouponiFormulai(Floater)i-iCORRECTiANSWERS-
Formulaiuseditoifindinewirateioniaifloating-rateisecurity
[NewiCouponiRatei=iReferenceiRatei(+)iori(-)iQuotediMargi
n].

DeleveragediFloateri-iCORRECTiANSWERS-Scalingifactor


vendarsol

, NewiCouponiRatei=i(bi*iReferenceiRate)i(+)iori(-)iQuotediMa
rgin.

InverseiFloateri-iCORRECTiANSWERS-
Cpnimovesiinidirectionioppositeitoireferenceirate
NewiCouponiRatei=iConstantiRatei(K)i-i(Li*iReferenceiRate)
WhereiKiisitheiconstantiandiLiisitheimultiplier

CouponiRateiCapi-iCORRECTiANSWERS-
Maximumirateipaidibyiborrower/issuer.

CouponiRateiFloori-iCORRECTiANSWERS-
Minimumiperiodicicouponiinterestipaymentireceivedibyilend
er/securityiowner.

CouponiRateiCollari-iCORRECTiANSWERS-
Simultaneousicombinationiofibothicapiandifloor.

RegulariRedemptioni-iCORRECTiANSWERS-
Whenibondsiareiredeemediunderitheicalliprovisionsispecifie
diinitheibondiindenture.

SpecialiRedemptioni-iCORRECTiANSWERS-
Whenibondsiareiredeemeditoicomplyiwithiaisinkingifundipro
visionioribecauseiofiaipropertyisaleimandatedibyigovernment
iauthority.



IniMarginiBuyingi-iCORRECTiANSWERS-
Oneiborrowsifundsifromiaibrokerioriaibankitoipurchaseisecur
itiesianditheisecuritiesithemselvesiareitheicollateraliforithei
marginiloan.

Repoi-iCORRECTiANSWERS-
Arrangementiwhereianiinstitutionisellsiaisecurityiwithiaicom
mitmentitoibuyiitibackiatiailateridateiatiaispecifiedihigheripri
ce.




vendarsol