Reading 39: Fixed-Income Securities: Defining Elements

Which of the following entities is considered a supranational issuer of bonds?

A bond with an original maturity of less than one year is best classified as a:

A bond that makes coupon interest payments in one currency and principal repayment in another currency is known as a:

Which of the following is an example of a negative covenant found in a bond indenture?

A bond issued by a Chinese firm that trades in the United States and is denominated in U.S. dollars is referred to as a:

Which type of bond is issued outside the jurisdiction of any one country and is denominated in a currency different from the currency of the countries in which it is sold?

Which of the following best describes a 'bankruptcy remote' entity created solely to own specific assets and issue bonds?

Equipment trust certificates are debt securities backed by:

Which of the following is considered a form of internal credit enhancement?

How is interest income from an Original Issue Discount (OID) bond typically treated for tax purposes in many jurisdictions?

A bond structure where the principal is paid fully at maturity is known as a:

In a fully amortizing bond, the final payment includes:

Which of the following is a disadvantage of a sinking fund provision for bondholders?

A floating-rate note (FRN) pays a coupon determined by:

Which provision in a floating-rate note benefits the issuer by placing a limit on how high the coupon rate can rise?

A step-up coupon bond allows the issuer to redeem the bond. If the issuer does not call the bond, what happens to the coupon rate?

A Payment-in-Kind (PIK) bond allows the issuer to make coupon payments by:

Consider a Capital-Indexed Bond like TIPS with a par value of 1,000 USD and a 3 percent annual coupon paid semiannually. If inflation is 1 percent over the first six months, what is the first coupon payment?

Which type of inflation-indexed bond pays a coupon rate that is adjusted for inflation while the principal remains unchanged?

A call option embedded in a bond grants the issuer the right to:

When are issuers most likely to exercise a call option on a bond?

What is the name for the period during which a callable bond cannot be called?

A 'make-whole' call provision typically results in a call price that is:

Which exercise style allows a bond to be called anytime after the first call date?

A put option embedded in a bond grants the bondholder the right to:

If a bond has a par value of 1,000 USD and a conversion price of 40 USD, what is the conversion ratio?

If a convertible bond has a conversion ratio of 25 and the current market price of the common share is 50 USD, what is the conversion value?

Which type of bond converts automatically to common stock if a specific event occurs, such as the issuer's equity capital falling below a required level?

What is the primary difference between a warrant and a convertible bond?

Compared to an otherwise identical noncallable bond, a callable bond must offer:

Compared to an otherwise identical option-free bond, a putable bond will sell at:

In the context of bond indentures, a 'pari passu' clause means:

A cross-default clause in a bond indenture states that:

Secured bonds backed by financial assets such as stocks and other bonds are known as:

A cash reserve fund used to make up for credit losses on underlying assets is an example of:

With an excess spread account, credit enhancement is provided by:

In a 'waterfall structure' for credit enhancement, losses are absorbed first by:

Interest income from municipal bonds in the United States is typically:

A deferred coupon bond is also known as a:

A bond quoted at 98 with a par value of 1,000 USD is selling for:

In a floating-rate note, the 'margin' is typically expressed in:

Ownership of which type of bond is evidenced simply by possessing the actual bond certificate?

Which type of issuer is an entity created solely to purchase financial assets and issue securitized bonds?

A 10-year bond with a 5 percent coupon paid semiannually will pay how much interest every six months on a 1,000 USD par value?

If a bond is trading at a premium to par, its market price is:

In an inverse floater, when the reference rate increases, the coupon rate:

Which type of bond allows the bondholder to choose the currency of payments?

Covered bonds differ from asset-backed securities (ABS) in that:

What does a 'negative pledge' covenant typically restrict?

In the United Kingdom, the term 'debenture' typically refers to: