Michael
A 10-year treasury note is trading at 99.16. What is the dollar price of the bond?
A. $99.16
B. $991.60
C. $995.00
D. $999.16
C. $995.00
If you know a bond's put price and date, what else do you need to know to calculate the yield to put?
A. Coupon dates and payment amounts through the put date
B. All coupon dates and payment amounts through maturity
C. An implied U.S. Treasury yield on the put date
D. The put premium
A. Coupon dates and payment amounts through the put date
Which of the following instruments is used by issues to protect against rising interest rates?
A. Interest rate cap
B. Interest rate floor
C. Floating-to-fixed interest rate swap
D. Basis swap
A. Interest rate cap
On Monday, November 1, an investor purchases a 4% municipal bond in regular way settlement. Assuming coupon dates of February 1 and August 1, how many days of accrued interest are owed to the seller?
A. 92 days
B. 93 days
C. 94 days
D. 95 days
A. 92 days
Which of the following is a characteristic of a corporate zero-coupon bond?
A. They generally have short-term maturities
B. Imputed interest is not taxable at the federal level
C. They typically pay interest semi-annually
D. Prices generally fluctuate more than other types of bonds in the secondary market
D) Prices generally fluctuate more than other types of bonds in the secondary market
The dirty price is the clean price plus what?
A. Interest Rate
B. Coupon Rate
C. Accrued Interest
D. Nominal Yield
C. Accrued Interest
If interest rates rise sharply and a 20-year municipal bond's price falls, what will happen to its quoted yield-to-maturity?
A. It will decrease
B. It will stay the same
C. It will increase
D. It depends on the current yield curve
C. It will increase
Which of the following yields is typically used to value a bond that has uneven cash flows?
A. Nominal yield
B. Yield-to-maturity
C. Yield-to-call
D. Cash flow yield
D. Cash flow yield
A 10-year Treasury note is trading at 99.16, what is the dollar price of the bond?
A. $99.16
B. $991.60
C. $995.00
D. $999.16
C. $995.00
The Producer Price Index (PPI) has continued to increase over the past 6 months. During this time interest rates have most likely:
A. Remained stable
B. Risen
C. Fallen
D. Been highly volatile
B. Risen
Which of the following would not be relevant in the calculation of a bond’s yield to maturity?
A. Coupon rate
B. Spot rate
C. Par value
D. Years to Maturity
B. Spot rate
If the Federal Reserve determines that a tight money policy is necessary, all of the following are likely EXCEPT:
A. The exchange value of the dollar will rise.
B. Bond prices will fall
C. Stock prices will fall
D. Interest rates will fall
D. Interest rates will fall
Which of the following activities would have a negative effect on the US balance of payments?
A. An increase in exports to foreign counties
B. New US investments abroad
C. An increase in foreign purchases of US securities
D. An increase in the value of the dollar against foreign currency
B. New US investments abroad
Which of the following statements is not true regarding the valuation of bond?
A. The price of a callable bond will be higher than that of a noncallable bond.
B. The future value of a cash flow will be higher than its present value.
C. A callable bond is priced based on its earliest call date.
D. Increasing interest rates lead to decreasing bond prices.
A. The price of a callable bond will be higher than that of a noncallable bond.
For purposes of calculating the dollar value of a basis point (DV01) in a municipal bond, what is the relationship between DV01 and the bond's yield?
A. It is inverse and constant
B. It is inverse and convex
C. It is direct and constant
D. It is direct and convex
B. It is inverse and convex
If the US Interest Rates go up, what happens to dollar value and exports?
A. Dollar value goes up, exports go up
B. Dollar value goes up, exports go down
C. Dollar value goes down, exports go down
D. Dollar value goes down, exports go up
B. Dollar value goes up, exports go down
A dealer buys recently issued municipal bonds that have not yet made interest payments. The first interest payment will be made two months after the purchase. Is the seller due any accrued interest?
A. Yes, accrued interest is due from the dated date through the first interest payment date
B. No, because no interest has yet been paid
C. Yes, accrued interest is due from the dated date through the day before settlement date
D. Only if the bonds are held until the first interest payment date
C. Yes, accrued interest is due from the dated date through the day before settlement date
Which of the following bonds has the highest duration?
A. Five-year zero-coupon bond
B. Five-year coupon bond
C. 30-year zero-coupon bond
D. 30-year coupon bond
C. 30-year zero-coupon bond
A 5% Ohio State municipal bond pays interest semiannually, is currently trading for 101 ½, and matures in 2020. How much will the bondholder receive at maturity?
A. $1,000
B. $1,025
C. $1,050
D. $1,175
B. $1,025
In times of falling interest rates and an expanding money supply, which two of the following are likely to occur?
I. Oil prices will rise
II. Oil prices will fall
III. Gold prices will rise
IV. Gold prices will fall
A. I and IV
B. I and III
C. II and IV
D. II and III
B. I and III
I. Oil prices will rise and,
III. Gold prices will rise
Which of these is the discount rate that makes the present value of a bond’s cash flows equal to its price?
A. Yield to Maturity
B. Yield to Call
C. Yield to Worst
D. Yield to Put
A. Yield to Maturity
If you know the price of a bond, how would you calculate DV01?
A. Change in price per 0.10% yield change
B. Change in price per 0.01% yield change
C. Change in price per 1% yield change
D. Change in price for each 1 day of change in maturity
B. Change in price per 0.01% yield change
Which two statements are true about the dirty price of a bond?
I. It includes accrued interest
II. It does not include accrued interest
III. It is more commonly used in European markets
IV. It is more commonly used in the United States
A. I & III
B. I & IV
C. II & III
D. II & IV
A. I & III
I. It includes accrued interest and,
III. It is more commonly used in European markets
A municipality has variable bonds outstanding. To protect its issuance, it purchases an interest rate cap on LIBOR with a cap rate of 4% on a $100 million principal amount. If LIBOR is 4.5% on the exercise date, how much does the municipality receive?
A. $50,000
B. $500,000
C. $4,500,000
D. $5,000,000
B. $500,000
A combination of which two of the following is a positive indicator for economic performance?
I. Interest rates increasing
II. Interest rates decreasing
III. CPI increasing
IV. CPI decreasing
A. I and III
B. II and III
C. I and IV
D. II and IV
C. I and IV
I. Interest rates increasing and,
IV. CPI decreasing