Notes fixed income上一道诡异的大题目，求教大家~为啥答案是这些……
Consider $1000,000 par value, 10-year, 6.5% coupon bonds issued on January 1, 2005. The bonds are callable and there is a sinking fund provision. The market rate for similar bonds is currently 5.7%. The main points of the prospectus are summarized as follows:
Call dates and prices:
. 2005 through 2009: 103
. After January 1, 2010: 102
Additional information:
. The bonds are non-refundable.
. The sinking fund provision requires that the company redeem $100,000 of the principal amount each year. Bonds called under the terms of the sinking fund provision will be redeemed at par.
. The credit rating of the bonds is currently the same as at issuance.
1. Using only the above information, Gould should conclude thatA)
A. the bonds do not have call protection.
B. the bonds were issued at and currently trade at premium.
C. given current rates, the bonds will likely be called and new bonds issued.
2. Which of the following statements about the sinking fund provisions for these bonds is most accurate?(C)
A. An investor would benefit from having his bonds called under the provision of the sinking fund.
B. An investor will receive a premium if the bond is redeemed prior to maturity under the provision of the sinking fund.
C. The bonds do not have an accelerated sinking fund provision.
3. A mortgage is least likelyC)
A. a collateralized loan.
B. subject to early retirement.
C. characterized by highly predictable cash flows.作者: 童老师 时间: 2013-9-13 01:34
问题1 解答：
The bonds are callable in 2005,indicating that there is no period of call protection,所以A正确
We have no information about the pricing of the bonds at issuance 故B不对
Additional information：the bonds are non-refundable 故C不对，C中说，the bonds may refundable
A)