21.Suppose that the spread duration for a fixed rate bond is 1.2. What is the approximation change in the bonds price if the spread changes by 15 basis points? *

2 points

a)-0.195

b)-0.0195

c)-0.00195

d)-0.000195

22.What is meant by spread duration for a floating rate bond? *

2 points

a)The spread represent compensation for credit risk

b)Spread duration is a measure used to estimate the sensitivity of a floaters price sensitivity to a change in the spread.

c)fixed spread duration that is paid by the fixed rate counter party

d)None of the above

23.What are the factors that affect the benchmark spread for an issue? *

2 points

a)Type of issuer,

b)the perceive credit worthiness,

c)term of maturity of the issue,

d)All of the above

24.Consider a bond selling at par (RM1000) with a coupon rate of 10% and 10 years to maturity.What is the price of this bond if the required yield is 9%. *

2 points

a)1044.20

b)1064.18

c)1000.00

d)964.18

25.By using the same par value and coupon rate as question 24,what is the price of the bond if the required yield increase from 9% to 12% and by what percentage did the price of this bond change? *

2 points

a)16.65%

b)17.65%

c)18.65%

d)19.65%

26.Non-recourse loans can be defined as ______________. *

2 points

a. Finance a commercial purchase or refinance a prior mortgage obligation

b. the lender looks to the proceeds from the sale of the property for repayment and has no recourse to the borrower for any paid balance.

c.Loans secured by collateral

d. none of the above.

27.Which of the following are the method of call protection? *

2 points

a.Prepayment lockout

b.Defeasance

c.Prepayment penalty points

d. All of the above

28.Clean-up Call Provisions function is to _______________. i.Permits the bond classes that are outstanding to purchase the remaining mortgage loans in a trust ii.To wind-down the transaction when the balance remaining in the transaction is too small to justify the on going administrative fees. iii.Typically limited to when the balance of mortgage loans in the mortgage pool represents 1-3% of the deals original balance. iv.Price of remaining loans = outstanding balance + accrued interest *

2 points

a.I, and ii

b.I,ii, and iv

c.I, iii and iv

d.I,ii,iii and iv

29. What are the responsibilities of servicers? *

2 points

i.Collecting monthly loan payments

ii.Keeping records relating to payments

iii.Maintaining property escrow for taxes and insurance

iv.Monitoring the condition of underlying properties

v.Preparing reports for the trustee

vi.Transferring collected funds to the trustee for payment to bondholders

a.I,ii and iii

b.Iv, v and vi

c.Ii,iv,v and vi

all of the above