International Finance And Treasury - Study Mode

[#306] Call premium is added to face value of bond to calculate
Correct Answer

(A) call price of bond

Explanation

Solution: Call premium is added to face value of bond to calculate call price of bond. The call price is the price a bond issuer or preferred stock issuer must pay investors if it wants to buy back, or call, all or part of an issue before the maturity date.

[#307] Investors who want cash flows in near terms shows preference for
Correct Answer

(C) interest portion of STRIPS

Explanation

Solution: Investors who want cash flows in near terms shows preference for interest portion of STRIPS. Interest only (IO) strips are a security where the holder receives the non-principal portion of the monthly payments on the underlying mortgages, Treasury bonds or other bonds.

[#308] Liquidity status of certificate of deposit which is more negotiable is considered as
Correct Answer

(C) more liquid

Explanation

Solution: Liquidity status of certificate of deposit which is more negotiable is considered as more liquid. Liquid certificates of deposit are a type of certificate of deposit (CD) that allow investors to make withdrawals without incurring a penalty. The funds in the account are accessible throughout the lifetime of the product where most traditional CD's apply a hefty fee for withdrawing early, reducing the interest earned to that point.

[#309] Commercial paper issued with low interest rate thus commercial paper are categorized as
Correct Answer

(D) better credit rating

Explanation

Solution: Commercial paper issued with low interest rate thus commercial paper are categorized as better credit rating. Higher scores represent better credit decisions and can make creditors more confident that you will repay your future debts as agreed.

[#310] Maximum maturity days of holding commercial paper are
Correct Answer

(B) 270 days

Explanation

Solution: Maximum maturity days of holding commercial paper are 270 days. Commercial paper, in the global financial market, is an unsecured promissory note with a fixed maturity of not more than 270 days.