International Finance And Treasury - Study Mode

[#711] Legal contract which states legal rights of seller and buyer is classified as
Correct Answer

(D) bond indenture

Explanation

Solution: Legal contract which states legal rights of seller and buyer is classified as bond indenture. The bond indenture (aka trust indenture, deed of trust) is a legal contract between the issuer and the trustee that specifies the scope and the responsibilities of the borrower, the trustee, and the lender, and the characteristics of the bond, such as the maturity date, coupon rate, and so on.

[#712] Eurobonds are traded in
Correct Answer

(D) over counter market

Explanation

Solution: Eurobonds are traded in over counter market. Like stocks, after issuance in the primary market, bonds are traded between investors in the secondary market. However, unlike stocks, most bonds are not traded in the secondary market via exchanges. Rather, bonds are traded over the counter (OTC).

[#713] Call premium of bond is $560 and call price of bond is $340 then face value of bond is
Correct Answer

(B) $220

Explanation

Solution: Face value of bond = Call premium of bond - Call price of bond = $560 - $340 = $220.

[#714] In firm commitment underwriting procedure, more risk is at side of
Correct Answer

(A) investment bank

Explanation

Solution: In firm commitment underwriting procedure, more risk is at side of investment bank. An investment bank (IB) is a financial intermediary that performs a variety of services. Most Investment banks specialize in large and complex financial transactions, such as underwriting, acting as an intermediary between a securities issuer and the investing public, facilitating mergers and other corporate reorganizations and acting as a broker or financial adviser for institutional clients.

[#715] Corporate bonds are also considered as
Correct Answer

(B) registered bonds

Explanation

Solution: Corporate bonds are also considered as registered bonds. A registered bond is a bond which has its owner registered with the bond's issuer. The owner's name and contact information is recorded and kept on file with the company, allowing it to pay the bond's coupon payment to the appropriate person.