1. A bond that pays a coupon only after an initial zero coupon period is best known as:

		A step-up coupon bond.
		A deferred coupon bond.
		A frozen coupon bond.

2.

Which of the following is not a negative covenant?

		Submission of periodic reports.
		Not selling assets pledged as collateral.
		Not exceeding maximum leverage ratios.

3.

Which of the following is least likely a purpose of the derivatives market?

		Price discovery.
		Risk management.
		Maximize arbitrage profits.

4.

A trader receives a call to deposit an additional margin on futures contract investments. The margin is required because, upon marking to market, the margin held falls below the initial margin deposited and is lower than the maintenance margin. In the futures market, this payment is called:

		the variation margin and brings payment up to the initial margin.
		the variation margin and brings payment up to the maintenance margin.
		the settlement price and brings payment up to the maintenance margin.

5.

An analyst states that an investor's risk aversion is not relevant in pricing derivatives but is relevant in pricing of the underlying assets. The analyst is:

		incorrect about the pricing of derivatives and incorrect about the pricing of underlying assets.
		incorrect about the pricing of derivatives but correct about the pricing of underlying assets.
		correct about the pricing of derivatives and correct about the pricing of underlying assets.