International Finance And Treasury - Study Mode

[#631] Type of instrument whoever holds it gets interest and principal amount is classified as
Correct Answer

(D) bearer instrument

Explanation

Solution: Type of instrument whoever holds it gets interest and principal amount is classified as bearer instrument. A bearer instrument, or bearer bond, is a type of fixed-income security in which no ownership information is recorded and the security is issued in physical form to the purchaser. The holder is presumed to be the owner, and whoever is in possession of the physical bond is entitled to the coupon payments.

[#632] Type of bonds in which whole issues matures on a single date is considered as
Correct Answer

(A) term bonds

Explanation

Solution: Type of bonds in which whole issues matures on a single date is considered as term bonds. A term bond refers to bonds from the same issue with the same maturity dates. In effect, term bonds mature on a specific date in the future and the bond face value must be repaid to the bondholder on that date. The term of the bond is the amount of time between bond issuance and bond maturity.

[#633] Foreign bonds issued in United Kingdom financial institutions are classified as
Correct Answer

(C) bull dog bonds

Explanation

Solution: Foreign bonds issued in United Kingdom financial institutions are classified as bull dog bonds. Bulldog bond is a type of bond purchased by buyers interested in earning a revenue stream from the British pound or sterling. A bulldog bond is traded in the United Kingdom. If the revenue is used to reduce debt that is also in British pounds, the exchange rate risk is decreased.

[#634] When characteristics of bonds are perceived as unfavourable or favourable to holders of bond then differences of yield spread
Correct Answer

(B) must changes

Explanation

Solution: When characteristics of bonds are perceived as unfavourable or favourable to holders of bond then differences of yield spread must changes. Organizations in order to raise capital issue bond to investors which is nothing but a financial contract, where the organization promises to pay the principal amount and interest (in the form of coupons) to the holder of the bond after a certain date. (Also called maturity date).Some Bonds do not pay interest to the investors, however it is mandatory for the issuers to pay the principal amount to the investors.

[#635] Treasury securities are considered as exempted from
Correct Answer

(A) federal taxes

Explanation

Solution: Treasury securities are considered as exempted from federal taxes. The federal income tax is the tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities. Federal income taxes are applied to all forms of earnings that make up a taxpayer's taxable income, such as employment earnings or capital gains.