International Finance And Treasury - Study Mode
[#316] Treasury notes that provide returns tied to inflation rate are classified as
Correct Answer
(D) inflation index bonds
Explanation
Solution: Treasury notes that provide returns tied to inflation rate are classified as inflation index bonds. Inflation Indexed Bond (IIB) is a bond issued by the Sovereign, which provides the investor a constant return irrespective of the level of inflation in the economy. The main objective of Inflation Indexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.
[#317] Type of bonds in which there are many maturity dates and part of issue is paid off at every maturity date is considered as
Correct Answer
(B) serial bonds
Explanation
Solution: Type of bonds in which there are many maturity dates and part of issue is paid off at every maturity date is considered as serial bonds. A serial bond is a bond issue that is structured so that a portion of the outstanding bonds mature at regular intervals until all of the bonds have matured. Because the bonds mature gradually over a period of years, these bonds are used to finance projects that provide a consistent income stream for bond repayment.
[#318] Placement of financial issue in which investment bank and municipality together finds large buyers is classified as
Correct Answer
(C) private placement
Explanation
Solution: Placement of financial issue in which investment bank and municipality together finds large buyers is classified as private placement. Raising adequate capital is integral to building and growing a business, and companies usually go the initial public offering (IPO) route. An alternative is the capital raising event known as a private placement.
[#319] Bonds having longer maturity on original loans than promised payments are classified as
Correct Answer
(C) Brady bonds
Explanation
Solution: Bonds having longer maturity on original loans than promised payments are classified as Brady bonds. Brady bonds are bonds that are issued by the governments of developing countries. Brady bonds are some of the most liquid emerging market securities. The bonds are named after former U.S. Treasury Secretary Nicholas Brady, who sponsored the effort to restructure emerging market debt.
[#320] If trading of municipal bonds is infrequent, then secondary market is considered as
Correct Answer
(A) thin markets
Explanation
Solution: If trading of municipal bonds is infrequent, then secondary market is considered as thin markets. A thin market is a market with few buying or selling offers. It is also known as a narrow market. The signature characteristic of a thin market is traders' price impact. When the number of buying or selling offers is small, investors' trading positions are large relative to market size.