Question
1. Ceteris paribus , the duration of a bond is positively correlated with the bond's _______________________. a. time to maturity. b. coupon rate c. YTM
1.
Ceteris paribus, the duration of a bond is positively correlated with the bond's _______________________.
a. time to maturity.
b. coupon rate
c. YTM
d. All of the above
e. None of the above.
2. T/F: A CDS is designed to transfer the credit exposure of fixed income products between parties, where the purchaser of the swap makes payments up until the maturity date of a contract. Payments are made to the seller of the swap. In return, the seller agrees to pay off a third-party debt if this party defaults on the loan. It is considered insurance against non-payment. A buyer of one might be speculating on the possibility that the third party will indeed default.
3. T/F: In a CDS, the issuer of the debt instrument is known as the reference entity.
4. T/F: A CDS is a standardized contract that could be used by parties to trades of a credit derivatives contract.
5. T/F: A CDO is a financial instrument where the underlying pool of debt obligations consists of bond-type instruments (corporate and emerging market bonds).
6. The word ____________ is used to describe a security that can be split up into smaller pieces and subsequently sold to investors and are commonly used with mortgage-backed securities.
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