Wealth Forum TV

Wealth Wealth Wealth Wealth Wealth Wealth

Advanced Wealth Management Course (IIBF) - Paper 3

Part II: Ch 1: Debt Instruments - Basic Concepts

Q1.

The bonds, wherein payments are paid in installments, during the life of the bond is called :

Callable Bonds

Puttable Bonds

Amortizing Bonds

Taxable Bonds

Q2.

Bonds that allow the issuer to alter the tenor of a bond, by redeeming it prior to the original maturity date are called:

Taxable bonds

Tax-free bonds

Puttable bonds

Callable bonds

Q3.

(I) In European option, where the issuer specifies the date on which the option could be exercised. (II) In American option, providing issuer the right to call the bond on or any time before a pre-specified date.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q4.

Bonds that provide an investor with the right to seek redemption from the issuer, prior to the maturity date, are called:

Amortizing bonds

Callable bonds

Puttable bonds

Convertible bonds

Q5.

An amount of Rs. 100 borrowed @18% would result in an annual interest cost of __________ , if interest is compounded on quarterly basis.

Rs. 18 p.a

Rs. 18.81 p.a

Rs. 19.25 p.a

Rs. 21.24 p.a

Q6.

(I) Fixed coupon bearing securities are known as “plain vanilla” securities. (II) Convertible bonds are called “deep discount” bonds.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q7.

The main objective behind SARFAESI Act is to strengthen creditor tights through foreclosure and enforcement of securities by banks and financial institutions.

True

False

Q8.

A bond’s real yield is its:

Nominal yield plus inflation

Nominal yield minus inflation

Current yield plus inflation

Current yield minus inflation

Q9.

You could purchase a Rs. 1,000 par value bond that pays 5% coupon (Rs. 50) annually, for Rs. 800. So what would be the current yield based on your Rs. 800 investments?

0.4%

0.16%

6.25%

0.25%

Q10.

(I) Taxable bonds are issued at coupons higher than tax-free bonds. (II) Yield to maturity is the overall return on the bond if it is held to maturity.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

wealthforumtv

Quick and Easy Guides