Question 5

Not yet answered

Marked out of 1.00

Flag question

Question text

When compared with bank bills, commercial paper has the advantage:

Select one:

a. that no interest is paid until maturity, unlike for a bank bill.

b. that a holder of commercial paper has no contingent liability when sold in the money markets.

c. that an issue of commercial paper often has a rollover facility attached, unlike for bank bills.

d. of greater liquidity in the secondary market.

e. are generally secured instruments

Clear my choice

Question 6

Not yet answered

Marked out of 1.00

Flag question

Question text

Which of the following about money markets is correct?

Select one:

a. A three-year bond with three months remaining until maturity is still termed a capital market security

b. Short-term debt and equity securities trade in the money markets

c. Money market securities are held generally until maturity and are traded infrequently

d. An issue of money market securities such as CP generally requires only a memorandum

e. Money markets involve trades of large volumes of small denominated securities

Question 7

Not yet answered

Marked out of 1.00

Flag question

Question text

Which of the following statements about the money markets is NOT correct?

Select one:

a. Default risk is generally higher in the capital market than for the money markets

b. Money market transactions include more secondary market trades for securities than primary market trades

c. The money market is a mainly a broker one linked by efficient communications system

d. Money market transactions are mainly over $1 million

e. Securities traded in the money markets are debt instruments only

Clear my choice

Question 8

Not yet answered

Marked out of 1.00

Flag question

Question text

Which of the following is NOT correct about Australasian money markets?

Select one:

a. Commercial paper is often issued by dealers

b. Money markets operate as primary and secondary markets

c. Underwriters of P-note programs receive fees about 1.00 per cent per annum

d. The face value of commercial paper is generally $100,000

e. Money markets are attractive to institutional investors as the markets are normally highly liquid

Question 10

Not yet answered

Marked out of 1.00

Flag question

Question text

If a potential bond investor learns that a bond is subordinated, this suggests it:

Select one:

a. is subordinated to preference shares.

b. Has a relatively low yield

c. Has subordinated collateral

d. has been issued because the company is in a strong financial position.

e. it has a high yield

Question 11

Not yet answered

Marked out of 1.00

Flag question

Question text

A convertible bond:

Select one:

a. Contains an option to exchange coupons for dividends

b. Contains an option to convert the bonds into ordinary shares at a specified date

c. Contains an option to change a short-term bond into a long-term bond

d. Contains an option to change the bonds into cash

e. Contains an option to change the bonds into futures

Clear my choice

Question 12

Not yet answered

Marked out of 1.00

Flag question

Question text

When a large NZ company firm issues a foreign debt security into the US capital markets denominated in USD, this is a:

Select one:

a. Matador bond

b. Kangaroo bond

c. Bulldog bond

d. Samurai bond

e. Yankee bond

Question 13

Not yet answered

Marked out of 1.00

Flag question

Question text

A large company has issued a fixed-rate bond with a call option. Now if market interest rates drop dramatically:

Select one:

a. This will raise its default risk and causing the supply of its bonds in the markets to fall

b. this will increase its default risk and causing the demand for its bonds in the markets to fall

c. The company will still keep paying the bond holders until its maturity

d. The company will call back the bond from bond holders and refinance at lower rate

e. The bond price will move to a discount to its face value

Clear my choice

Question 14

Not yet answered

Marked out of 1.00

Flag question

Question text

Private placement for debt issues avoids:

Select one:

a. the need for a prospectus

b. the primary market

c. any disclosure of material that may affect the company 11 Which of the following is the most volatile in price when interest rates fluctuate? a. Commercial paper b. Treasury bills c. Promissory notes d. Capital notes *e. Blue-chip corporate bonds

d. the need to disclose what the funding is to be used for

e. the need for up-to date financial statements

Question 15

Not yet answered

Marked out of 1.00

Flag question

Question text

When a large company with a high credit rating, wishes to find more long-term debt financing, it may:

Select one:

a. Offer an issue of corporate bonds to the public

b. Issue repurchase agreements

c. Issue shares into the capital markets

d. Offer a debenture with no security attached

e. Covered bonds

Clear my choice

Question 16

Not yet answered

Marked out of 1.00

Flag question

Question text

Which of the following will suffer the largest loss in value from rising interest rates?

Select one:

a. 1-year promissory notes.

b. 270-day certificates of deposit.

c. three-year government bonds

d. 180-day Treasury bills.

e. ten -year government bonds.

Question 17

Not yet answered

Marked out of 1.00

Flag question

Question text

If a publicly listed company with a large number of different ranked bonds defaults on its debt, then the ranking of its bond holders in terms of lowest to highest claim on company assets is likely to be:

Select one:

a. Floating-charge debenture holders, then fixed-charge debenture holders, then unsecured note holders

b. Floating-charge debenture holders, then unsecured note holders and then fixed-charge debenture holders

c. Unsecured note holders, then fixed-charge debenture holders, then floating-charge debenture holders

d. Fixed-charge debenture holders, then floating-charge debenture holders, then unsecured note holders

e. Unsecured note holders, then floating-charge debenture holders, then fixed-charge debenture holders

Clear my choice

Question 18

Not yet answered

Marked out of 1.00

Flag question

Question text

Which of the following is correct about securities and contracts?

Select one:

a. A covered bond is a bond issued by a commercial bank that is supported by a claim over property the bank owns

b. If a bond is bought at a discount to par, its yield to maturity will be higher than its coupon rate

c. The document with limited information provided to investors in a private placement issue, is called a prospectus

d. When a borrower defaults on their bond payments, then any related fixed charges convert to floating charges

e. Due diligence is a formal document providing information on a proposed security issue

Question 20

Not yet answered

Marked out of 1.00

Flag question

Question text

The seller of a forward contract:

Select one:

a. agrees to receive a product at a future date at a pre-specified price.

b. agrees to receive a product at a future date at the price on that future date.

c. agrees to deliver a product at a future date at a pre-specified price.

d. agrees to deliver a product at a future date for a price set on that future date.

e. agrees to receive a product today or anytime in the future.

Question 21

Not yet answered

Marked out of 1.00

Flag question

Question text

If you buy a futures contract for a 90-day bank bill with a certain interest rate and on its maturity date, the interest rate on 90-day bank bills has fallen, then you will have:

Select one:

a. lost money on your long position

b. gained money on your long futures position

c. lost money on your short position

d. gained money on your short position

e. lost money on the actual 90-day bank bill