Fixed Income Test 2025/2026 Exam
Questions and Detailed Answers | Get it
100% Correct Answers
Difference between nominal spread and Z spread will be larger if: - 🧠
ANSWER ✔✔The yield curve slope is steeper
Full-Valuation Approach vs Duration/Convexity - 🧠 ANSWER ✔✔Allows
modeling of the response to both parallel and non-parallel shifts in the yield
curve
-duration only parallel shifts
CMO First Tranche Of Bond - 🧠 ANSWER ✔✔Highest prepayment risk
lowest interest rate risk
-absorbs all prepayments but is first to be paid off
,Bond Equivalent Yield from YTM - 🧠 ANSWER ✔✔2 x (YTM^.5 - 1) = BEY
Percentage Change of Price Duration - 🧠 ANSWER ✔✔-Duration x
(increase/decrease in interest rate)
Percentage Change Price Convexity - 🧠 ANSWER ✔✔Convexity *
(increase/decrease in interest rate)^2
Callable or Putable: Which most likely negative convexity? - 🧠 ANSWER
✔✔Callable
Investor Least Likely Exposed from Reinvestment Risk from owning - 🧠
ANSWER ✔✔Zero-coupon Bond
Lower Coupon and Longer Maturity Interest Rate Risk - 🧠 ANSWER
✔✔Both increase more than counterparts
Tax-Equivalent Yield - 🧠 ANSWER ✔✔Municipal Rate / (1 - Tax)
Money Duration - 🧠 ANSWER ✔✔annual modified duration x full price
Bond Price Change Formula With Convexity and Duration - 🧠 ANSWER
✔✔-[AnnModDuration x changeYTM] + 1/2[convexity x changeYTM^2] x
100
, Modified Duration - 🧠 ANSWER ✔✔Approximate percentage change in
bond's value for a 1% change in its YTM
MacDuration - 🧠 ANSWER ✔✔Weighted average number of periods until
bonds cash flows scheduled to be paid
-bonds market price risk and reinvestment risk offset
Rising interest rate volatility effect on Putable Bonds - 🧠 ANSWER ✔✔Will
increase value
-Put = price of nonputable + put option
Rising interest rate volatility effect on callable bond - 🧠 ANSWER ✔✔will
decrease value
-call= price of noncallable - call option
On-the-run Treasury - 🧠 ANSWER ✔✔Most recently auctioned treasury
securities in each maturity
Revenue Bond - 🧠 ANSWER ✔✔Municipal bonds that will be repaid from
revenue generated by a specific project
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
STATEMENT. ALL RIGHTS RESERVED
3
Questions and Detailed Answers | Get it
100% Correct Answers
Difference between nominal spread and Z spread will be larger if: - 🧠
ANSWER ✔✔The yield curve slope is steeper
Full-Valuation Approach vs Duration/Convexity - 🧠 ANSWER ✔✔Allows
modeling of the response to both parallel and non-parallel shifts in the yield
curve
-duration only parallel shifts
CMO First Tranche Of Bond - 🧠 ANSWER ✔✔Highest prepayment risk
lowest interest rate risk
-absorbs all prepayments but is first to be paid off
,Bond Equivalent Yield from YTM - 🧠 ANSWER ✔✔2 x (YTM^.5 - 1) = BEY
Percentage Change of Price Duration - 🧠 ANSWER ✔✔-Duration x
(increase/decrease in interest rate)
Percentage Change Price Convexity - 🧠 ANSWER ✔✔Convexity *
(increase/decrease in interest rate)^2
Callable or Putable: Which most likely negative convexity? - 🧠 ANSWER
✔✔Callable
Investor Least Likely Exposed from Reinvestment Risk from owning - 🧠
ANSWER ✔✔Zero-coupon Bond
Lower Coupon and Longer Maturity Interest Rate Risk - 🧠 ANSWER
✔✔Both increase more than counterparts
Tax-Equivalent Yield - 🧠 ANSWER ✔✔Municipal Rate / (1 - Tax)
Money Duration - 🧠 ANSWER ✔✔annual modified duration x full price
Bond Price Change Formula With Convexity and Duration - 🧠 ANSWER
✔✔-[AnnModDuration x changeYTM] + 1/2[convexity x changeYTM^2] x
100
, Modified Duration - 🧠 ANSWER ✔✔Approximate percentage change in
bond's value for a 1% change in its YTM
MacDuration - 🧠 ANSWER ✔✔Weighted average number of periods until
bonds cash flows scheduled to be paid
-bonds market price risk and reinvestment risk offset
Rising interest rate volatility effect on Putable Bonds - 🧠 ANSWER ✔✔Will
increase value
-Put = price of nonputable + put option
Rising interest rate volatility effect on callable bond - 🧠 ANSWER ✔✔will
decrease value
-call= price of noncallable - call option
On-the-run Treasury - 🧠 ANSWER ✔✔Most recently auctioned treasury
securities in each maturity
Revenue Bond - 🧠 ANSWER ✔✔Municipal bonds that will be repaid from
revenue generated by a specific project
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
STATEMENT. ALL RIGHTS RESERVED
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