Scribd
Upload
117 views

Practice Quiz M4 3

This document is a summary of a student's ungraded practice quiz on fixed income and bond markets. It contains 5 multiple choice questions testing the student's understanding of topics like how bond prices change with interest rates, credit spreads, and bond recovery. The student got some answers incorrect, showing there is still room for improvement in fully comprehending these bond market concepts.

Uploaded by

sadiqpmp
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
117 views

Practice Quiz M4 3

This document is a summary of a student's ungraded practice quiz on fixed income and bond markets. It contains 5 multiple choice questions testing the student's understanding of topics like how bond prices change with interest rates, credit spreads, and bond recovery. The student got some answers incorrect, showing there is still room for improvement in fully comprehending these bond market concepts.

Uploaded by

sadiqpmp
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

8/24/2020 Practice Quiz M4 (Ungraded)

My courses ▶ (20/07) MScFE 560 Financial Markets (C20-S3)


▶ Module 4: Fixed Income and Bond Markets ▶ Practice Quiz M4 (Ungraded)

Started on Monday, 24 August 2020, 10:54 PM


State Finished
Completed on Monday, 24 August 2020, 11:02 PM
Time taken 7 mins 37 secs

Question 1
Complete

Not graded

Consider the following statements:

Statement A: Supply and demand forces in the bond market will price a
bond differently when using different interest-rate conventions.
Statement B: The price of a coupon-bearing bond is equal to the prices of
the zero-coupon bonds that give the same cash ow pro le.

Which of the statements given above is correct?

Select one:
Both statement A and B
Neither statement A nor B
Only statement B

Only statement A

Your answer is incorrect.

https://masters.wqu.org/mod/quiz/review.php?attempt=239308&cmid=44414 1/4
8/24/2020 Practice Quiz M4 (Ungraded)

Question 2

Complete

Not graded

How will one-year zero-coupon bond prices change if both the one-year and
four-year interest rates increase by 1%?

Select one:
It depends on whether there are other changes to the yield curve.
One-year zero-coupon bond prices will decrease by more than four-year
zero-coupon bond prices.
One-year zero-coupon bond prices will decrease by the same amount as
four-year zero-coupon bond prices.
One-year zero-coupon bond prices will decrease by less than four-year
zero-coupon bond prices.

Your answer is correct.

Question 3

Complete
Not graded

AAA incorporation. has issued 30-year semiannual coupon bonds with a face
value of $1,000. If the annual coupon rate is 14% and the current yield to maturity
is 15%, what is the rm's current price per bond?

Select one:
$239.39
This question cannot be answered because the coupon payment
information is missing.
$231.38
$934.20

Your answer is incorrect.

https://masters.wqu.org/mod/quiz/review.php?attempt=239308&cmid=44414 2/4
8/24/2020 Practice Quiz M4 (Ungraded)

Question 4

Complete

Not graded

Consider a government bond trading at an annual effective interest rate of 4.5%


and a corporate bond trading at an annual effective interest rate of 5.4%. 

What is the credit spread?

Select one:
Exactly 0.9%
None of the options listed are correct.
Approximately 0.9%, but the terms of the bonds must be accounted for to
determine an exact spread.
Approximately 0.9%, but the terms and par values of the bonds must be
accounted for to determine an exact spread.

Your answer is incorrect.

Question 5

Complete
Not graded

What is the recovery of a bond?

Select one:
A new issuance of a bond after it has been traded on the secondary market
The discount an investor gets to compensate them for facing credit risk
The fraction of par value that the bond holder gets in the event of default
The fee an investor must pay to purchase a bond after primary trades are
exhausted

Your answer is correct.

◄ Notes 4 M4
Jump to...

https://masters.wqu.org/mod/quiz/review.php?attempt=239308&cmid=44414 3/4
8/24/2020 Practice Quiz M4 (Ungraded)

Live Session M4 ►

https://masters.wqu.org/mod/quiz/review.php?attempt=239308&cmid=44414 4/4

You might also like