International Finance And Treasury - Study Mode

[#706] Face value of bond is $550 and call price of bond is $475 then value of call premium is
Correct Answer

(C) $75

Explanation

Solution: Value of call premium = Face value of bond - Call price of bond = $550 - $475 = $75.

[#707] Treasury security in which final principal payment is separated from periodic interest payment is classified as
Correct Answer

(A) STRIP

Explanation

Solution: Treasury security in which final principal payment is separated from periodic interest payment is classified as STRIP. They are securities that represent the separate interest and principal components of Treasury securities.

[#708] For a taxable security, tax exempted interest rate on municipal bonds us used to determine
Correct Answer

(A) tax equivalent rate of return

Explanation

Solution: For a taxable security, tax exempted interest rate on municipal bonds us used to determine tax equivalent rate of return.

[#709] Financial institutions having loans swapped for bonds can sell all bonds in
Correct Answer

(D) secondary markets

Explanation

Solution: Financial institutions having loans swapped for bonds can sell all bonds in secondary markets. A secondary market is a marketplace where already issued securities both shares and debt can be bought and sold by the investors. So, it is a market where investors buy securities from other investors, and not from the issuing company.

[#710] Eurobonds are denominated in only one currency which is
Correct Answer

(C) Euros

Explanation

Solution: Eurobonds are denominated in only one currency which is Euros. Eurobonds are bonds denominated in a currency different from the currency of the countries in which they are issued and sold. The name Eurobond has nothing to do with euros or even with Europe.