Question 106

The estimation of cash flows for certain types of bonds is difficult. The length of the cash flow stream is:

A)    unpredictable for both variable rate and convertible bonds.

B)   predictable for both convertible bonds and bonds with sinking fund provisions.

C)   unpredictable for variable rate bonds and predictable for callable bonds.

D)   predictable for variable rate bonds but unpredictable for bonds with sinking fund provisions.

Question 107

Which of the following statements regarding callable bonds is most accurate? Callable bonds:

A)    are likely to be called when interest rates have increased.

B)   that have a deferred call feature allow the bondholder to defer the call for up to 5 years.

C)   may not be called at par value--there must be at least a slight call premium to compensate the holder for losing the bond.

D)   typically require that the issuer pay a premium above par to call the issue, and the amount of this premium usually declines as the bond approaches maturity.

Which of the following statements regarding debentures is most accurate? Debentures:

A)    are commonly issued by government sponsored entities such as Fannie Mae and Freddie Mac.

B)   may not be issued by government sponsored entities.

C)   are often called first mortgage bonds.

D)   are free from default risk if issued by federally related or government sponsored entities.

Question 109

Three corporate bonds are identical in all respects except that one is callable by the issuer, one is putable to the issuer, and one is option-free. Which of these three bonds is likely to have the greatest and least spread to Treasuries?

       Greatest spread     Least spread

A)    Callable
              Putable

B)   Callable
              Option-free

C)   Option-free          Putable

D)   Option-free          Callable

Question 110

In the United States, an income bond not currently paying interest and a bond of the highest quality would be assigned the following quality ratings (by Standard & Poors), respectively:

A)    B, A

B)   CI, AAA

C)   D, AA

D)   F, AAA

[此贴子已经被作者于2008-11-8 9:44:46编辑过]

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