International Finance And Treasury - Study Mode
[#596] Service acquired from other state is related to
Correct Answer
(C) outsourcing
Explanation
Solution: Service acquired from other state is related to outsourcing. Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure.
[#597] Value of option issued to call debt is $940 and return rate on callable bond is $480 then return rate on non-callable bond is
Correct Answer
(A) $460
Explanation
Solution: Return rate on non-callable bond = Value of option issued to call debt - Return rate on callable bond = $940 - $480 = $460.
[#598] Risk associated with Eurobonds and usually bears by underwriters is related to
Correct Answer
(D) initial sale of bond
Explanation
Solution: Risk associated with Eurobonds and usually bears by underwriters is related to initial sale of bond. Most bonds can be sold by the initial bondholder to other investors after they have been issued. In other words, a bond investor does not have to hold a bond all the way through to its maturity date.
[#599] Call premium of bond is $630 and call price of bond is $240 then face value of bond is
Correct Answer
(C) $390
Explanation
Solution: Face value of bond = Call premium of bond - Call price of bond = $630 - $240 = $390.
[#600] Principal amount in Treasury Inflation Protection Securities is considered as
Correct Answer
(B) inflation adjusted principal
Explanation
Solution: Principal amount in Treasury Inflation Protection Securities is considered as inflation adjusted principal. Treasury Inflation-Protected Securities (TIPS) are a form of U.S. Treasury bond designed to help investors protect against inflation. These bonds are indexed to inflation, have U.S. government backing, and pay investors a fixed interest rate as the bond's par value adjusts with the inflation rate.