Terminology
What does the abbreviation (ABS) stand for?
What is a asset-backed securities
Describe how a Pass-Through Structure works?
what is a form of securitization under which investors receive an equal pro-rata share of all underlying cash flows
What are the bonds issued by the UK Government commonly referred to as and what is their maturity length?
What are 'Gilts' and 30-year maturity or gilt-edged securities
Name the 3 most common types of Bonds issued?
What is:
1. Government Bonds
2. Municipality Bonds
3. Corporate Bonds
Please name each of the bond life cycles in order from first to last?
Points = ?
What is:
1. the bond is issued
2. bond is purchased
3. coupon payments
4. bond is held
5. maturity date
Define what Basel III is?
(X2 Points): Must be able to provide specific details in reference to the question, to gain double the points.
What is a regulatory provision...
for (2x): that requires banks to hold 8% of risk-weighted assets in tier I and tier II capital
A (BLANK) of the remaining assets are so small in value that the servicer cannot profitably process and distribute cash flows. To avoid this, the issuer of the ABS can unwind the entire transaction by selling the remaining assets back to the originator and returning all the remaining principal to the investors?
What is a clean-up call
Name the two market regulators that are both in the USA and UK?
(3X Points)
what is:
In the U.S., Securities and Exchange Commission (SEC)
and
UK is Prudential Regulation Authority (PRA)
The U.S. Treasury created a program, established in 1985, which allows investors to buy the individual components as separate securities. What is the name of that program?
what are STRIPS or Separate Trading of Registered Interest and Principal of Securities
This type of trader will position themselves in the market based on their expectations regarding interest rate volatility to gain trading profit?
what is a Proprietary Trader
A rating agency examines all of these except:
a. structure of the deal
b. credit quality of the investors in the ABS
c. credit enhancements
d. underlying collateral
what is b. credit quality of the investors in the ABS
The process of bringing Eurobonds to market has several phases, each with a different objective. Name one of those processes and what it involves?
(BIG BONUS): If you name more than one phase you will receive an additional 300 points per correct answer.
What is:
Pre-announcement period: The borrower and the lead manager decide the preliminary terms of new issues.
Grey market trading: The bond is traded prior to its actual issue.
Pricing date: The terms of new issues are finalized between the borrower and syndicate groups and the syndicate members enter into an agreement to buy bonds from the borrower.
Announcement date: New issues are formally announced, and a syndicate is formed.
Issue date: The bond begins trading in the secondary market.
Stabilization period: The lead manager oversees the stabilization of the bond price.
Name the 4 markets where government bonds are traded?
what are the:
1. Primary Market
2. Secondary Market
3. When-issued market
4. Repo Market
What is the term called when "the borrower must make regular payments of both principal and interest and pay off the loan over a specified period of time"?
what are Amortizing Assets
What is the term called when to avoid paying a fee or premium for insurance through an external provider where ABS issuers can modify the product structure to create?
what is an internal credit enhancement
What are the three Japanese Government Bond types (JGBs)?
what are long-dated government bonds with maturities of 20 years
medium-dated bonds with maturities of 6 to 10 years
and
discount government bonds with maturities of up to 5 years.
Underwriting guarantees what? to place an entire bond issue into the market in return for a fee and investment banks either guarantee a minimum price for the bonds or places the paper at the best price available?
To place an entire bond issue into the market in return for a fee and investment banks either guarantee a minimum price for the bonds or places the paper at the best price available.
What does the abbreviation (EMTN) stand for?
what are Euro Medium-Term Notes
What does a Pay-Through Structure Consist of?
what is that it allows the issuer to pay different proportions of interest and principal to different maturity classes known as tranches.
What is the key difference between Eurobonds and domestic bonds in the way in which they are issued?
(X4 Points): Must be able to clearly answer the question with the main detail difference.
what is rather than issuing to the market directly, the borrower (a multinational corporation, a large domestic corporation, an international institution, or a sovereign government) invites a number of investment banks and securities houses to bid for the role of the lead manager. The lead manager underwrites the issue.
Name and describe one of the corporate bond market classifications?
what is the:
* Country: The classification of corporate market by country includes the following four major markets:
Among these, the USD corporate market is the most mature, followed by the GBP, EUR, and JPY markets. The USD corporate market is the largest and most diversified which is more than twice as big as the euro market.
*Sector: Based on the sectoral classification, the corporate bond market is divided into many sectors like financial, industrial, utility, etc. In the U.S., the industrial sector is more dominant as it uses the market channel to finance investment projects.
It is seen that the sector composition in the USD market is far more homogeneous than in other markets. Thus, local credit portfolio diversification can be achieved best in the USD market. For example, the banking sector is systematically predominant in the GBP, EUR, and JPY financial markets. The telecommunications sector exceeds one-third of the Euro industrial market.