If interest rates are expected to increase, the coupon payment structure most likely to benefit the issuer is a ______. a) step-up coupon b) inflation-linked coupon c) put option d) cap in a floating-rate note

If interest rates are expected to increase, the coupon payment structure most likely to
benefit the issuer is a ______.
a) step-up coupon
b) inflation-linked coupon
c) put option
d) cap in a floating-rate note
by

1 Answer

Answer :

d) cap in a floating-rate note
by

Related questions

The collar of a floating-rate bond refers to the minimum and maximum ______. a) call periods b) maturity dates c) coupon rates d) yields to maturity

Description : The collar of a floating-rate bond refers to the minimum and maximum ______. a) call periods b) maturity dates c) coupon rates d) yields to maturity

Last Answer : c) coupon rates

___________ is the risk that an issuer will fail to satisfy the terms of the agreement with respect to the timely payment of interest and principal. a) Default risk b) Credit spread risk c) Volatility risk d) Downgrade risk

Description : ___________ is the risk that an issuer will fail to satisfy the terms of the agreement with respect to the timely payment of interest and principal. a) Default risk b) Credit spread risk c) Volatility risk d) Downgrade risk

Last Answer : a) Default risk

______ is the opinion of the rating agency on the relative ability and willingness of the issuer of the debt instrument to meet the debt service obligation as and when the arise. (a) merit rating b) credit rating c) rating by merchant banker )

Description : ______ is the opinion of the rating agency on the relative ability and willingness of the issuer of the debt instrument to meet the debt service obligation as and when the arise. (a) merit rating b) credit rating c) rating by merchant banker )

Last Answer : (a) merit rating

What is the value of Three-Year 4.25% Annual Coupon Bond Puttable at Par one year from now if one year forward rates at T (0), T (1) and T (2) are 2.50%, 3% and 4.5% respectively? a) 101.54 b) 101.71 c) 102.67 d) 102.89

Description : What is the value of Three-Year 4.25% Annual Coupon Bond Puttable at Par one year from now if one year forward rates at T (0), T (1) and T (2) are 2.50%, 3% and 4.5% respectively? a) 101.54 b) 101.71 c) 102.67 d) 102.89

Last Answer : c) 102.67

The primary role of the ________ is to purchase securities from the issuer and resell them to investor. a. Underwriter b. Shareholder c. Banker

Description : The primary role of the ________ is to purchase securities from the issuer and resell them to investor. a. Underwriter b. Shareholder c. Banker

Last Answer : a. Underwriter

Under ______ debentures, if the issuer fails on payment of either the principal or interest amount, his assets can be sold to repay the liability to the investors A. Secured Debentures B. Partly Convertible Debentures (PCD) C. Fully convertible Debentures (FCD) D. Optionally Convertible Debentures (OCD) E. Unsecured Debentures

Description : Under ______ debentures, if the issuer fails on payment of either the principal or interest amount, his assets can be sold to repay the liability to the investors A. Secured Debentures B. ... ) C. Fully convertible Debentures (FCD) D. Optionally Convertible Debentures (OCD) E. Unsecured Debentures

Last Answer : A. Secured Debentures Explanation: These instruments are secured by a charge on the fixed assets of the issuer company. So if the issuer fails on payment of either the principal or interest amount, his assets can be sold to repay the liability to the investors.

Under managed floating exchange rates, if the rate of inflation in the United States is less than the rate of inflation pf its trading partners, the dollar will likely: A. Appreciate against foreign currencies B. Depreciate against foreign currencies C. Be officially revalued by the government D. Be officially devalued by the government

Description : Under managed floating exchange rates, if the rate of inflation in the United States is less than the rate of inflation pf its trading partners, the dollar will likely: A. Appreciate against ... currencies C. Be officially revalued by the government D. Be officially devalued by the government

Last Answer : A. Appreciate against foreign currencies

Under the SARFAESI Act, 2002, the Central Registrar may allow the filing of the particulars of creation of security interest within _____ next following the expiry of the period of initial thirty days on payment of additional fee. a) Ten days b) Thirty days c) Twenty-five days d) Fifteen days

Description : Under the SARFAESI Act, 2002, the Central Registrar may allow the filing of the particulars of creation of security interest within _____ next following the expiry of the period of initial thirty days on payment of additional fee. a) Ten days b) Thirty days c) Twenty-five days d) Fifteen days

Last Answer : b) Thirty days

Which of the following bonds has the shortest duration? a) A bond with 20-year maturity, 10% coupon rate b) A bond with 20-year maturity, 6% coupon rate c) A bond with 10-year maturity, 6% coupon rate d) A bond with 10-year maturity, 10% coupon rate

Description : Which of the following bonds has the shortest duration? a) A bond with 20-year maturity, 10% coupon rate b) A bond with 20-year maturity, 6% coupon rate c) A bond with 10-year maturity, 6% coupon rate d) A bond with 10-year maturity, 10% coupon rate

Last Answer : All else constant, a bond with a longer maturity will be more sensitive to changes in interest rates. All else constant, a bond with a lower coupon will have greater interest rate risk. The correct answer was D) 10-year maturity, 10 percent coupon rate.

Which one of the following statements is correct concerning the weighted average cost of capital (WACC)? a) The WACC may decrease as a firm's debt-equity ratio increases. b) In the computation of WACC, weight assigned to the preferred stock is based on the coupon rate multiplied by the par value of the stock. c) A firm's WACC will decrease as the corporate tax rate decreases. d) The weight of the common stock used in the computation of the WACC is based on the number of shares outstanding multiplied by the book value per share.

Description : Which one of the following statements is correct concerning the weighted average cost of capital (WACC)? a) The WACC may decrease as a firm's debt-equity ratio increases. b) In the computation of ... of the WACC is based on the number of shares outstanding multiplied by the book value per share.

Last Answer : a) The WACC may decrease as a firm's debt-equity ratio increases.

Budget card requires monthly payment on behalf of that ______.(a) holder b) banker c) seller)

Description : Budget card requires monthly payment on behalf of that ______.(a) holder b) banker c) seller)

Last Answer : (a) holder

An investment pays Rs.300 annually for five years, with the first payment occurring today. The present value of the investment discounted at a 4% annual rate is approximately __________. a) Rs.1336 b) Rs.1389 c) Rs.1625 d) Rs.1925

Description : An investment pays Rs.300 annually for five years, with the first payment occurring today. The present value of the investment discounted at a 4% annual rate is approximately __________. a) Rs.1336 b) Rs.1389 c) Rs.1625 d) Rs.1925

Last Answer : b) Rs.1389

A perpetual bond does not have a fixed _________. a) interest rate b) maturity period c) duration d) underlying asset

Description : A perpetual bond does not have a fixed _________. a) interest rate b) maturity period c) duration d) underlying asset

Last Answer : b) maturity period

The fixed-rate payer in an interest-rate swap has a position equivalent to a series of ____________. a) long interest-rate puts and short interest-rate calls b) short interest-rate puts and long interest-rate calls c) long interest-rate puts and calls d) short interest-rate puts and calls

Description : The fixed-rate payer in an interest-rate swap has a position equivalent to a series of ____________. a) long interest-rate puts and short interest-rate calls b) short interest-rate puts and long interest-rate calls c) long interest-rate puts and calls d) short interest-rate puts and calls

Last Answer : b) short interest-rate puts and long interest-rate calls

The effective rate of interest on consumer finance is generally _______than the rate applicable to business finance.(a) Lower b) Higher c) Medium)

Description : The effective rate of interest on consumer finance is generally _______than the rate applicable to business finance.(a) Lower b) Higher c) Medium)

Last Answer : b) Higher

Which of the following is not a type of Debt Instrument? A. Issuer class B. Security C. Coupon bearing D. All of the Above E. None of the Above

Description : Which of the following is not a type of Debt Instrument? A. Issuer class B. Security C. Coupon bearing D. All of the Above E. None of the Above

Last Answer : E. None of the Above Explanation: Debt Instruments are of various types.The distinguishing factors of the Debt Instruments are as follows: Issuer class Coupon bearing / Discounted Interest Terms Repayment Terms Security / Collateral / Guarantee

Which of the following is not a financial service under the Insolvency and Bankruptcy Code, 2016? a) Accepting of deposits b) Effecting contracts of insurance c) Payment of wages to employees d) Establishing an investment scheme

Description : Which of the following is not a financial service under the Insolvency and Bankruptcy Code, 2016? a) Accepting of deposits b) Effecting contracts of insurance c) Payment of wages to employees d) Establishing an investment scheme

Last Answer : c) Payment of wages to employees

Cheque card issued by a bank which guarantees the payment of_______ within prescribed limit. (a) Cheque b) purchase c) cash

Description : Cheque card issued by a bank which guarantees the payment of_______ within prescribed limit. (a) Cheque b) purchase c) cash

Last Answer : (a) Cheque

The first step in the Monte Carlo simulation process is to _____. a) generate random numbers b) set up cumulative probability distributions c) establish random number intervals d) set up probability distributions

Description : The first step in the Monte Carlo simulation process is to _____. a) generate random numbers b) set up cumulative probability distributions c) establish random number intervals d) set up probability distributions

Last Answer : d) set up probability distributions

The credit default spread method of valuation of a guarantee given by a parent company on behalf of its subsidiary involves estimating the value ____________. a) using credit default spread based on the credit rating of the subsidiary b) using credit default spread based on the credit rating of the guarantor c) based on probability of default d) of the guarantee using an option pricing model

Description : The credit default spread method of valuation of a guarantee given by a parent company on behalf of its subsidiary involves estimating the value ____________. a) using credit default spread based on ... guarantor c) based on probability of default d) of the guarantee using an option pricing model

Last Answer : a) using credit default spread based on the credit rating of the subsidiary

Underwriters build up ______ confidence in the issue of securities. a. Borrowers b. Investors c. Company

Description : Underwriters build up ______ confidence in the issue of securities. a. Borrowers b. Investors c. Company

Last Answer : b. Investors

STRIPS stands for ______________. a) Separate Trading of Registered Interest and Principal Shares b) Segregated Trading of Registered Interest and Principal Securities c) Separate Trading of Registered Interest and Principal Securities d) Segregated Trading of Registered Interest and Principal Shares

Description : STRIPS stands for ______________. a) Separate Trading of Registered Interest and Principal Shares b) Segregated Trading of Registered Interest and Principal Securities c) Separate Trading of ... Interest and Principal Securities d) Segregated Trading of Registered Interest and Principal Shares

Last Answer : c) Separate Trading of Registered Interest and Principal Securitie

Which of the following statements is true? a) Debenture holder is an owner of the company. b) Debenture holder can get back its money only on the liquidation of the company. c) A debenture issued at a discount can be redeemed at a premium. d) A debenture holder receives interest only in the event of profits

Description : Which of the following statements is true? a) Debenture holder is an owner of the company. b) Debenture holder can get back its money only on the liquidation of the company. c) A debenture issued ... can be redeemed at a premium. d) A debenture holder receives interest only in the event of profits

Last Answer : c) A debenture issued at a discount can be redeemed at a premium.

Salary under section 17(1) of the Income Tax Act, 1961 does not include _____. a) wages b) pension c) interest d) gratuity

Description : Salary under section 17(1) of the Income Tax Act, 1961 does not include _____. a) wages b) pension c) interest d) gratuity

Last Answer : interest

. As per section 40(b) of the Income Tax Act, 1961, upto ____ % per annum simple interest on capital is allowed towards remuneration of working partners. a) 6 b) 12 c) 15

Description : . As per section 40(b) of the Income Tax Act, 1961, upto ____ % per annum simple interest on capital is allowed towards remuneration of working partners. a) 6 b) 12 c) 15

Last Answer : b) 12

What is the relation between fiscal deficit (FD) and primary deficit (PD)? a) PD = FD - Depreciation b) PD = FD - Interest payments c) FD = PD - Interest payments d) FD = PD - Depreciation

Description : What is the relation between fiscal deficit (FD) and primary deficit (PD)? a) PD = FD - Depreciation b) PD = FD - Interest payments c) FD = PD - Interest payments d) FD = PD - Depreciation

Last Answer : PD = FD - Interest payments

If the aggregate fair market value of prescribed movable property received by a taxpayer as gift during the year is Rs.1,50,000, tax will be charged on ______. a) Rs.1,00,000 b) Rs.50,000 c) Rs.1,50,000 d) Rs.0

Description : If the aggregate fair market value of prescribed movable property received by a taxpayer as gift during the year is Rs.1,50,000, tax will be charged on ______. a) Rs.1,00,000 b) Rs.50,000 c) Rs.1,50,000 d) Rs.0

Last Answer : c) Rs.1,50,000

valuer should not use or divulge to other clients or any other party any confidential information about the ______ company. a) subject b) client c) public d) listed

Description : valuer should not use or divulge to other clients or any other party any confidential information about the ______ company. a) subject b) client c) public d) listed

Last Answer : a) subject

______ is used to estimate the worthiness of the credit for company, country or any individual company. .(a) credit evaluation b) Credit rating c) both )

Description : ______ is used to estimate the worthiness of the credit for company, country or any individual company. .(a) credit evaluation b) Credit rating c) both )

Last Answer : b) Credit rating

______ is a privilege of credit card offered to the family members i.e. spouse, parents or children above 18 years of age of the primary credit card holder. (a) Add- plus card b) Add on card c) both)

Description : ______ is a privilege of credit card offered to the family members i.e. spouse, parents or children above 18 years of age of the primary credit card holder. (a) Add- plus card b) Add on card c) both)

Last Answer : b) Add on card

______ is an isolated function of a credit risk evaluation.(a) Credit rating b) credit evaluation c) both )

Description : ______ is an isolated function of a credit risk evaluation.(a) Credit rating b) credit evaluation c) both )

Last Answer : (a) Credit rating

An applicant scoring more than ______ point is considered as one with goods credit standing.(a)50 b)70 c) 40)

Description : An applicant scoring more than ______ point is considered as one with goods credit standing.(a)50 b)70 c) 40)

Last Answer : b)70

______ refers to the transfer of management control by creating a separate business by separating it from their existing owner.(a) Buy Out b) Buy in c)

Description : ______ refers to the transfer of management control by creating a separate business by separating it from their existing owner.(a) Buy Out b) Buy in c)

Last Answer : (a) Buy Out

______ refers to financing of an enterprise which has overcome the highly risky stage and have recorded profit but cannot go public, thus needs financial support. (a)Venture capital b) development capital c) seed capital)

Description : ______ refers to financing of an enterprise which has overcome the highly risky stage and have recorded profit but cannot go public, thus needs financial support. (a)Venture capital b) development capital c) seed capital)

Last Answer : b) development capital

Buying low in one market and selling high in the other market , it called ______ a. Arbitrage trading b. Hedging c. Clearing

Description : Buying low in one market and selling high in the other market , it called ______ a. Arbitrage trading b. Hedging c. Clearing

Last Answer : a. Arbitrage trading

______ Banks help to revive (cure) sick industrial units. a. Public b. Merchant c. All

Description : ______ Banks help to revive (cure) sick industrial units. a. Public b. Merchant c. All

Last Answer : b. Merchant

______ __ services are mainly provided to foreign investors. a. Custodial Services b. Financial Services c. Factoring Services

Description : ______ __ services are mainly provided to foreign investors. a. Custodial Services b. Financial Services c. Factoring Services

Last Answer : a. Custodial Services

Credit Protection is available in ______ a. Without Recourse factoring b. With recourse factoring c. None of the above

Description : Credit Protection is available in ______ a. Without Recourse factoring b. With recourse factoring c. None of the above

Last Answer : a. Without Recourse factoring

______ is a market for financial assets which have a long or indefinite maturity. a. Financial market b. Capital market c. Money market

Description : ______ is a market for financial assets which have a long or indefinite maturity. a. Financial market b. Capital market c. Money market

Last Answer : b. Capital market

The decline in the combined ratio is most likely to indicate that the insurer has ___________. a) increased its administration expenses b) increased its long term borrowing c) improved its investment returns d) improved its underwriting results

Description : The decline in the combined ratio is most likely to indicate that the insurer has ___________. a) increased its administration expenses b) increased its long term borrowing c) improved its investment returns d) improved its underwriting results

Last Answer : d) improved its underwriting results

Which of the following would most likely be useful for performing sensitivity analysis of business valuation? a) Standard of Value b) Understanding of Business c) Premise of Value d) Audit Opinion

Description : Which of the following would most likely be useful for performing sensitivity analysis of business valuation? a) Standard of Value b) Understanding of Business c) Premise of Value d) Audit Opinion

Last Answer : b) Understanding of Business

Which of the following valuation methods would most likely not be used for business valuation? a) Discounted Cash Flow b) Net Assets Method c) Multi-period Excess Earning Method d) Industry Price Earnings Ratio

Description : Which of the following valuation methods would most likely not be used for business valuation? a) Discounted Cash Flow b) Net Assets Method c) Multi-period Excess Earning Method d) Industry Price Earnings Ratio

Last Answer : c) Rs.200 crore

During the construction period, price variation clause in contracts caters to (A) Increase in rates of only important materials (B) Variation in cost in materials element, labour element and petrol-oil-lubricant element (C) Variation in total cost of the project on an ad hoc basis (D) Rate of inflation

Description : During the construction period, price variation clause in contracts caters to (A) Increase in rates of only important materials (B) Variation in cost in materials element, labour element and petrol-oil-lubricant ... ) Variation in total cost of the project on an ad hoc basis (D) Rate of inflation

Last Answer : (B) Variation in cost in materials element, labour element and petrol-oil-lubricant element

What's your view on CDs and interest rates given that (supposedly) inflation is about to pick up?

Description : What's your view on CDs and interest rates given that (supposedly) inflation is about to pick up?

Last Answer : I'd go with the one year. I have a .9% interest rate with a CD that has about 6 months left, and I can actually add money to it at any time, but I can not withdraw it once it is in ... in the next 6 months interest rates will start to rise. Complete guess, I obviously do not have a crystal ball.

In which of the following instruments the investor has the option to either convert these debentures into shares at price decided by the issuer/agreed upon at the time of issue. A. Non Convertible Debentures (NCD) B. Partly Convertible Debentures (PCD) C. Fully convertible Debentures (FCD) D. Optionally Convertible Debentures (OCD) E. None of the Above

Description : In which of the following instruments the investor has the option to either convert these debentures into shares at price decided by the issuer/agreed upon at the time of issue. A. Non Convertible ... Fully convertible Debentures (FCD) D. Optionally Convertible Debentures (OCD) E. None of the Above

Last Answer : D. Optionally Convertible Debentures (OCD) Explanation: The investor has the option to either convert these debentures into shares at price decided by the issuer/agreed upon at the time of issue.

The relationship between maturity and interest rates is known as ________ A. Yield Curve B. Zero Coupon Yield Curve C. Negative Yield Curve D. Neutral Yield Curve E. None of the Above

Description : The relationship between maturity and interest rates is known as ________ A. Yield Curve B. Zero Coupon Yield Curve C. Negative Yield Curve D. Neutral Yield Curve E. None of the Above

Last Answer : B. Zero Coupon Yield Curve Explanation: The Zero Coupon Yield Curve aka the Spot Curve is a relationship between maturity and interest rates which differs from a normal yield curve

The economic environment for this simulation game will include a. a favorable environment featuring limited growth, high inflation, and reasonable interest rates. b. a favorable environment featuring modest growth, low inflation, and reasonable interest rates. c. a highly variable environment featuring significant changes in growth, inflation, and drastic fluctuations in interest rates. d. a constant environment featuring measurable growth, constant inflation rates, and constant interest rates. e. economic downturn and other surprises.

Description : The economic environment for this simulation game will include a. a favorable environment featuring limited growth, high inflation, and reasonable interest rates. b. a favorable environment featuring ... inflation rates, and constant interest rates. e. economic downturn and other surprises.

Last Answer : b. a favorable environment featuring modest growth, low inflation, and reasonable interest rates.

The required rate of return is closest to ____________. a) 10.012% b) 7.062% c) 0.062% c) 11.065%

Description : The required rate of return is closest to ____________. a) 10.012% b) 7.062% c) 0.062% c) 11.065%

Last Answer : c) 0.062%

Which of the following is the capitalization rate of the BC Ltd.? a) 5.0% b) 3 % c) 4% d) 4.5%

Description : Which of the following is the capitalization rate of the BC Ltd.? a) 5.0% b) 3 % c) 4% d) 4.5%

Last Answer : c) 4%

What adjustment is made while using the Discounted Cash Flow method to value cyclical companies? a) Normalize earnings b) Use high discount rate c) Use bank rate for discounting d) Use high growth rate

Description : What adjustment is made while using the Discounted Cash Flow method to value cyclical companies? a) Normalize earnings b) Use high discount rate c) Use bank rate for discounting d) Use high growth rate

Last Answer : a) Normalize earnings