CFA Domain 8: Fixed Income (Quiz 1)

In the context of securitization, describing a special-purpose entity (SPE) as "bankruptcy remote" most likely refers to the:

If an investor is most concerned about being able to legally enforce payment of principal and interest in the event of default, which of the following bonds represents the least appropriate investment choice?

"An analyst has compiled the following data about a bond that has an embedded call option and matures in 8 years: If an option pricing model determines that the value of the embedded call is 208 basis points/year, the option-adjusted spread for the bond (in basis points/year) is closest to:"

Which of the following is least likely a benefit of securitization?

A 4%, annual-pay bond is currently priced at 105 per 100 of par value. It has three years to maturity and is callable at a price of 102.5 at the end of Year 1 and 100.5 at the end of Year 2. The yield-to-worst is the bond's:

A five-year amortizing bond has a face value of $1,000. If it was issued at par with a yield-to-maturity of 5.18% and pays investors $160 annually at the end of Years 1 through 4, the total payment in Year 5 is closest to:

Typically, corporate bonds are most likely issued through a(n):

Which of the following statements least likely applies to an original issue discount (OID) bond on an annual basis?

A large corporate issuer issued $50 million to the general public in a new bond offering two years ago. Using the same offering circular, the company just issued an additional $30 million in new bonds, most likely due to a:

A high-yield bond issuer has a "top-heavy" capital structure. The owner of the company's senior unsecured debt most likely has a:

An analyst is classifying bonds within the global fixed income market. Which of the following is least likely a valid distinction for the analyst to use?

A bond matures in 3 years and pays a 7% annual coupon. The bond is currently trading at 104.0469 per 100 par value with a 5.50% yield-to-maturity. The Macaulay duration of the bond is closest to:

Which of the following best describes loss severity for a debt instrument?

An arbitrage collateralized debt obligation (CDO) holding a portfolio of fixed coupon bonds is funded in part by a floating rate senior tranche. The interest rate mismatch of fixed rate collateral versus a floating rate tranche is:

A floating-rate note (FRN) with semiannual interest of LIBOR + 0.7% receives a credit upgrade. As a result, the discount margin is 45 basis points on the reset date two years from maturity. LIBOR is 2%. Based only on this information, on the reset date, the FRN will most likely be priced at:

An investor buys a bond that matures in exactly 20 years. The bond pays a 6% annual coupon, is trading at an 8% YTM, and is priced at 80.3637 per 100 par value. Assuming a constant reinvestment rate of 8%, if the bond is held until maturity which of the following sources most likely contributes the largest portion of the investor's total return?

The terms in a bond indenture that require the issuer to make interest payments at specific periods are known as:

A callable bond's coupon rate is 100 basis points (bps) below yields-to-maturity on noncallable bonds having the same time to maturity and credit risk. If market yields decline by 200 bps, the callable bond's effective duration most likely:

Theoretically, all bonds on a par curve are least likely to have the same:

A noncallable bond has a 6% YTM based on annual compounding. The bond has an annual modified duration of 18.868 and an annual convexity of 372.027. If the bond's yield is expected to increase to 6.20%, the expected price change is closest to: