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Advanced Wealth Management Course (IIBF) - Paper 3
Part II: Ch 1: Debt Instruments - Basic Concepts
Q
1
.
The bonds, wherein payments are paid in installments, during the life of the bond is called :
Callable Bonds
Puttable Bonds
Amortizing Bonds
Taxable Bonds
Q
2
.
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
Q
3
.
(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
Q
4
.
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
Q
5
.
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
Q
6
.
(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
Q
7
.
The main objective behind SARFAESI Act is to strengthen creditor tights through foreclosure and enforcement of securities by banks and financial institutions.
True
False
Q
8
.
A bond’s real yield is its:
Nominal yield plus inflation
Nominal yield minus inflation
Current yield plus inflation
Current yield minus inflation
Q
9
.
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%
Q
10
.
(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