If theoretical spot rate curve lies below the par yield curve, then the curve is?

A. upward sloping

B. downward sloping

C. flat

Which of the following credit risk model performs best in measuring a debt issues default probability?

A. Reduced form model

B. Credit rating

C. Structural model

All else equal, if a AA rated corporate bond undergoes a downgrade in credit rating you would expect that the bond yield for this company would most likely:

A. Decrease

B. Decrease

C. Stay the same

5.Given the following information: value of a normal bond is $92, value of the option is $2, and the value of bond with embedded option is $90, the embedded option is most likely:

A. Option free

B. Call option

C. Put option

6.Which of the following embedded option(s) is/are granted to the issuer?

A.Callable bond

B.Puttable bond

C.Both callable and puttable bonds

7.An investor buys a 6% annual payment bond with 3 years to maturity. The bond has a yield-to-maturity of 7%. The bond's modified duration is closest to:

A. 2.73

B. 2.83

C. 2.65