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Flashcards in Debt Securities Deck (131)
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1

Equivalent of 100 basis points

1%

2

Regular way settlement for corporate bonds

T + 2

3

Regular way settlement for municipal bonds

T + 2

4

Regular way settlement for agency securities

T + 2

5

Regular way settlement for Treasuries

T + 1

6

Frequency of interest payments to bondholders

Semi-annual

7

Par value of a corporate bond

$1,000

8

Relationship between bond prices and bond yields

Inverse

9

Value of one bond point

$10

10

A bond that is priced below par

Discount

11

Use a 360-day year in the calculation of accrued interest

Municipal and corporate bonds

12

Use a 365-day year in the calculation of accrued interest

U.S. Government bonds and notes

13

Of YTC, YTM and CY, the yield that is highest when a bond is trading at a premium and is callable

Current Yield (CY)

14

Of YTM, YTC and CY, the yield that is highest when a bond is trading at a discount and is callable

Yield to Call (YTC)

15

Of YTM, YTC and CY, the yield that is lowest when a bond is trading at a discount

Current Yield (CY)

16

Of YTM, YTC and CY, the yield that is lowest when a bond is trading at a premium and is callable

Yield to call (YTC)

17

Amount a bondholder receives at maturity of an ABC 9% bond

$1045 (par + 1 semiannual interest payment)

18

Amount of interest paid every 6 months on 5M XYZ 6% bonds

$150 ($30 semiannual interest per bond x 5 bonds)

19

Securities that are not represented by a physical certificate

Book Entry securities

20

Interest payment varies based on performance of an index

Variable rate or adjustable rate bonds

21

The date in the future at which a bondholder receives principal

Maturity

22

Of long-term and short-term bonds, which generally pays a higher interest amount?

Long-term bonds

23

Of long-term and short-term bonds, which generally has lower price volatility?

Short-term bonds

24

The degree of risk associated with an issuer's ability to repay the principal

Credit or default risk

25

A bond that is rated BBB or above by Standard and Poor's

Investment Grade

26

A bond that may be redeemed by the issuer prior to its maturity date

Callable bond

27

Risk that a bond may be called prior to maturity

Call risk

28

The process of calling bonds when interest rates have fallen

Refunding

29

Special account in which Issuer funds are set aside in advance of a call

Sinking fund

30

Specific time period from date of issue when a bond cannot be called

Call Protection Period