International Finance And Treasury - Study Mode
[#261] Department who is appointed by bond holders as representative or monitor of bonds is considered as
Correct Answer
(A) trustee
Explanation
Solution: Department who is appointed by bond holders as representative or monitor of bonds is considered as trustee. A bond trustee is hired by a bond issuer and oversees the implementation of a bond or trust indenture, which is a contract between a bond issuer and a bondholder. The trustee has a fiduciary responsibility to act on behalf of the issuer, rather than in its own interests.
[#262] Bonds that are considered as junk bonds and termed as higher yield are classified as
Correct Answer
(C) subordinated debentures
Explanation
Solution: Bonds that are considered as junk bonds and termed as higher yield are classified as subordinated debentures. Subordinated debt (also known as a subordinated debenture) is an unsecured loan or bond that ranks below other, more senior loans or securities with respect to claims on assets or earnings. Subordinated debentures are thus also known as junior securities.
[#263] Mortgage bonds issued by corporations are considered as
Correct Answer
(A) secured debt issues
Explanation
Solution: Mortgage bonds issued by corporations are considered as secured debt issues. Secured debt is debt backed or secured by collateral to reduce the risk associated with lending, such as a mortgage. If the borrower defaults on repayment, the bank seizes the house, sells it and uses the proceeds to pay back the debt.
[#264] Default risk is measured by large traders, managers and investors with help of
Correct Answer
(B) analyzing financial ratios
Explanation
Solution: Default risk is measured by large traders, managers and investors with help of analyzing financial ratios. Default risk is the chance that a company or individual will be unable to make the required payments on their debt obligation. Lenders and investors are exposed to default risk in virtually all forms of credit extensions. A higher level of risk leads to a higher required return, and in turn, a higher interest rate.
[#265] Suppliers, funds consumers, foreign and government intervening intermediaries are classified as participants of
Correct Answer
(A) financial markets
Explanation
Solution: Suppliers, funds consumers, foreign and government intervening intermediaries are classified as participants of financial markets. Financial markets refer broadly to any marketplace where the trading of securities occurs, including the stock market, bond market, forex market, and derivatives market, among others. Financial markets are vital to the smooth operation of capitalist economies.