International Finance And Treasury - Study Mode

[#716] Replacement of bearer bonds with registered bonds is because of lack of
Correct Answer

(C) security of bearer bonds

Explanation

Solution: Replacement of bearer bonds with registered bonds is because of lack of security of bearer bonds. Bearer bonds that are lost cannot be replaced as no records exist on the identity of the security owner.

[#717] Call premium is $385 and face value of bond is $285 then call price of bonds is
Correct Answer

(B) $770

Explanation

Solution: Price of bonds = Call premium + Face value of bond = $385 + $285 = $770.

[#718] With consolidation of currencies, created liquidity allows Eurobond
Correct Answer

(D) demand and size to increase

Explanation

Solution: With consolidation of currencies, created liquidity allows Eurobond demand and size to increase. A Eurobond is denominated in a currency other than the home currency of the country or market in which it is issued. These bonds are frequently grouped together by the currency in which they are denominated, such as eurodollar or Euroyen bonds.

[#719] Type of bonds issued by governments outside home country of issuer of bond are classified as
Correct Answer

(B) foreign bonds

Explanation

Solution: Type of bonds issued by governments outside home country of issuer of bond are classified as foreign bonds. A foreign bond is a bond issued in a domestic market by a foreign entity in the domestic market's currency as a means of raising capital. For foreign firms doing a large amount of business in the domestic market, issuing foreign bonds, such as bulldog bonds, Matilda bonds, and samurai bonds, is a common practice.

[#720] Prospectus which describe new securities are distributed before their registration is classified as
Correct Answer

(A) red herring prospectus

Explanation

Solution: Prospectus which describe new securities are distributed before their registration is classified as red herring prospectus. Red Herring Prospectus is a prospectus, which does not have details of either price or number of shares being offered, or the amount of issue. This means that in case price is not disclosed, the number of shares and the upper and lower price bands are disclosed.