Question 106 

Poor communication of the intent of the central bank is least likely to lead to: 

A) uncertainty among market participants.

B) instability in financial markets.

C) policy decisions that surprise markets.

D) information asymmetry.

Question 107 

Embedded options that favor the bondholder are least likely to include: 

A) conversion provisions.

B) a floor under a floating coupon rate.

C) a put option.

D) accelerated sinking fund provisions.

Question 108 

The fully-taxable equivalent yield on a 6% municipal security for an investor in a 35% marginal tax bracket is closest to: 

A) 17.1%.

B) 3.9%.

C) 6.0%.

D) 9.2%.

Question 109 

Inflation risk is most accurately described as: 

A) the risk that the purchasing power of a bond’s cash flows will be less than expected.

B) the risk that a bond’s cash inflows are less than expected.

C) the effect of changes in the market rate of interest on a bond’s value.

D) the effect of changes in interest rates on fixed-income securities with embedded options.

Question 110 

Which of the following statements about U.S. debt securities is most accurate?

A) Government agency issues are backed by the full faith and credit of the Treasury.

B) General obligation bonds are backed by the full faith and credit of the issuer.

C) Municipal bond guarantees apply to principal but not interest payments in the event of default.

D) Coupon strips refer to the principal payments derived from stripped bonds or notes.

答案和详解如下：

Question 106 

The correct answer was D) information asymmetry. 

Poor communication of the intent of the central bank can lead to uncertainty, instability in financial markets, and policy decisions that surprise markets. Information asymmetry refers to the fact that central banks sometimes have information that is not known to financial market participants. 

This question tested from Session 15, Reading 66, LOS b

Question 107 

The correct answer was D) accelerated sinking fund provisions. 

An accelerated sinking fund provision benefits the issuer, not the bondholder. 

This question tested from Session 15, Reading 62, LOS e

Question 108 

The correct answer was D) 9.2%. 

6%/(1 - .35) = 9.23%. 

This question tested from Session 15, Reading 65, LOS i

Question 109 

The correct answer was A) the risk that the purchasing power of a bond’s cash flows will be less than expected. 

Inflation risk refers to the possibility that prices of goods and services in general will increase more than expected, reducing the purchasing power of a bond’s cash flows. 

This question tested from Session 15, Reading 63, LOS m

Question 110 

The correct answer was B) 

General obligation bonds are backed by the full faith and credit of the issuer.

One type of issuer of federal agency securities is government sponsored enterprises (GSE). GSE securities are not backed by the full faith and credit of the Treasury. Municipal bond guarantees may apply to both principal and interest guarantees. Coupon strips refer to the coupon payments that are stripped from the original security and trade as zero coupon securities.

This question tested from Session 15, Reading 64, LOS g, (Part 2)

3x

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