CFA Domain 8: Fixed Income (Quiz 2)

When a hedge fund engages in a reverse repurchase agreement, which of the following is the most likely purpose?

"An analyst has collected information on three bonds, each of which matures in 10 years and uses an annual compounding convention: Which of the bonds most likely has the shortest Macaulay duration?"

One year after it was issued, an investor purchases a tax-exempt, coupon-paying bond for less than its face value and holds it to maturity. The most likely tax consequence for the taxpayer is:

A change in which of the following is mostly likely to influence the benchmark component of a bond's yield-to-maturity?

With respect to principal repayment structures, a serial maturity bond is most similar to a:

A two-year floating rate note is priced at 98 per 100 par value and pays interest quarterly based on the three-month LIBOR. It has a discount margin of 50 basis points (bps) and uses a 30/360 day-count convention. If the three-month LIBOR is 3% throughout the life of the bond, the quoted margin is closest to:

One characteristic of a leveraged inverse floater is that a change in the coupon interest rate is:

Which of the following is most likely a credit enhancement for commercial mortgage-backed securities (CMBS)?

A noncallable bond is currently trading at par. Its required yield-to-maturity (YTM) falls by 10 basis points (bps) and its new price is 101. If its YTM had instead increased by 10 bps, which of the following would be the best estimate of its price?

An analyst finds that a mortgage pass-through security issued three years ago has a prepayment rate of 200 PSA. The analyst's most appropriate conclusion is that the:

Assuming there are no changes in the credit risk of the issuer, an increase in the volatility of interest rates will least likely have an impact on the price of a:

An investor buys a bond that matures in 22 years. The bond has a 7% coupon rate and pays semiannually. The investor's price was 112.1271 when the bond's YTM was 6%. Before the next coupon date, the bond's YTM rises to 8% and stays at that level until the bond is sold at the end of 6 years. If the reinvestment rate over the period is 8%, the investor's annualized rate of return over the 6-year investment horizon is closest to:

The original issue discount tax provision most likely applies to a(n):

A noncallable bond that pays a 6% annual coupon has exactly 4 years until maturity. The bond is priced at 98.2871 per 100 par value and has a 6.50% YTM. Assuming a 10–basis point change in YTM, the bond's approximate modified duration is closest to:

The credit risk of nonsovereign government revenue bonds is most likely based on:

An investor is evaluating several callable bonds. The investor believes short-term interest rates are likely to rise significantly, but intermediate and long-term rates will be stable. Which of the following types of duration would be most appropriate for evaluating the risk of the bonds given the expected flattening of the yield curve?

In a nonagency residential mortgage-backed security (RMBS) where a significant portion of the securitized mortgages are nonrecourse and underwater, bondholders are most likely exposed to:

According to this data, which of the following ratios is highest?

"A credit analyst gathers the following data on a company: Based on this information, which year resulted in the lowest FCF after dividends/debt ratio?"

A zero-coupon bond has 5 years to maturity. If the market discount rate is 6%, and assuming semiannual compounding, the bond's price per 100 of par value is closest to: