International Finance And Treasury - Study Mode
[#636] Bonds that are usually unsecured and are only backed by worthiness of issuing firm are classified as
Correct Answer
(D) debentures
Explanation
Solution: Bonds that are usually unsecured and are only backed by worthiness of issuing firm are classified as debentures. Debentures are a debt instrument used by companies and government to issue the loan. The loan is issued to corporates based on their reputation at a fixed rate of interest. Debentures are also known as a bond which serves as an IOU between issuers and purchaser.
[#637] Interest rate on Eurobonds are paid
Correct Answer
(C) annually
Explanation
Solution: Interest rate on Eurobonds are paid annually. A Eurobond is debt instrument that's denominated in a currency other than the home currency of the country or market in which it is issued.
[#638] Foreign bonds issued in United States financial institutions are classified as
Correct Answer
(C) Yankee bonds
Explanation
Solution: Foreign bonds issued in United States financial institutions are classified as Yankee bonds. Yankee bonds are bonds issued in the U.S. bond market by a foreign entity, and they are denominated in U.S. dollars. Governments, companies, and other entities issue Yankee bonds.
[#639] Thin trading of municipal bonds in secondary markets is because of
Correct Answer
(B) lack of information
Explanation
Solution: Thin trading of municipal bonds in secondary markets is because of lack of information. Municipal bonds are loans investors make to local governments. They are issued by cities, states, counties, or other local governments. For that reason, the interest they pay on the bonds is tax-free.
[#640] In firm commitment underwriting, securities issued are then sold to investors at relatively
Correct Answer
(A) higher price
Explanation
Solution: In firm commitment underwriting, securities issued are then sold to investors at relatively higher price. In the securities industry an underwriter is a company, usually an investment bank, that helps companies introduce their new securities to the market. In the insurance business, an underwriter is a company liable for insured losses in return for a fee (premium).