Question 1

A "registered bond" is one that

Accepted Answer

A) shows the owner's name on the bond. 
B) the owner's name is recorded by the issuer. 
C) the owner's name is assigned to a bond serial number recorded by the issuer. 
D) all of the above 
A) shows the owner's name on the bond. 
B) the owner's name is recorded by the issuer. 
C) the owner's name is assigned to a bond serial number recorded by the issuer. 
D) all of the above

Question 2

Shelf registration

Accepted Answer

A) allows the shelves in a set of bookshelves to remain level. 
B) allows an issuer to preregister a securities issue, and then "shelve" the securities for later sale. 
C) allows an investment bank to increase the fees they charge by charging for storage of the "shelved" securities. 
D) eliminates the information disclosure that many foreign firms found objectionable in the foreign bond market. 
A) allows the shelves in a set of bookshelves to remain level. 
B) allows an issuer to preregister a securities issue, and then "shelve" the securities for later sale. 
C) allows an investment bank to increase the fees they charge by charging for storage of the "shelved" securities. 
D) eliminates the information disclosure that many foreign firms found objectionable in the foreign bond market.

Question 3

Find the yield to maturity for this floating rate note: The reset date is today; coupons are paid annually according to the formula (LIBOR + ¼ percent); since issuance,there has not been a change in the issuer's credit rating.The bond has ten years to maturity and LIBOR = 3.5 percent.

Accepted Answer

A) 3.5% 
B) 4% 
C) 3.75% 
D) There is not enough information provided to make a determination. 
A) 3.5% 
B) 4% 
C) 3.75% 
D) There is not enough information provided to make a determination.

Question 4

Investors in corporate bonds would still be interested in sovereign credit ratings

Accepted Answer

A) because the sovereign credit rating usually represents a ceiling on corporate credit ratings within that country. 
B) because they might play the TED spread. 
C) because they are the rating assigned by the country's regulators. 
D) none of the above 
A) because the sovereign credit rating usually represents a ceiling on corporate credit ratings within that country. 
B) because they might play the TED spread. 
C) because they are the rating assigned by the country's regulators. 
D) none of the above

Question 5

A "bearer bond" is one that

Accepted Answer

A) shows the owner's name on the bond. 
B) the owner's name is recorded by the issuer. 
C) possession is evidence of ownership. 
D) both a) and b) 
A) shows the owner's name on the bond. 
B) the owner's name is recorded by the issuer. 
C) possession is evidence of ownership. 
D) both a) and b)

Question 6

The shorter length of time in bringing a Eurodollar bond issue to market,coupled with the lower rate of interest that borrowers pay for Eurodollar bond financing in comparison to Yankee bond financing,are two major reasons why the Eurobond segment of the international bond market is roughly ________ the size of the foreign bond segment.

Accepted Answer

A) four times 
B) two times 
C) ten times 
D) one hundred times 
A) four times 
B) two times 
C) ten times 
D) one hundred times

Question 7

A five-year,4 percent euro denominated bond sells at par.A comparable risk five-year,5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value.It sells for €1,250.What is the implied $/€ exchange rate at maturity?

Accepted Answer

A) $1.2266/€1.00 
B) €0.8153/$1.00 
C) $1.25/€1.00 
D) $1.50/€1.00 
A) $1.2266/€1.00 
B) €0.8153/$1.00 
C) $1.25/€1.00 
D) $1.50/€1.00

Question 8

Bonds with equity warrants

Accepted Answer

A) are really the same as convertible bonds if the prestated price of exercising the warrant is the par value of the bond. 
B) can be viewed as straight debt with a call option (technically a warrant) attached. 
C) can only be exercised on coupon dates. 
D) typically are convertible as well. 
A) are really the same as convertible bonds if the prestated price of exercising the warrant is the par value of the bond. 
B) can be viewed as straight debt with a call option (technically a warrant) attached. 
C) can only be exercised on coupon dates. 
D) typically are convertible as well.

Question 9

A global bond issue denominated in U.S.dollars and issued by U.S.corporations

Accepted Answer

A) trade as Eurobonds overseas. 
B) trade as domestic bonds in the U.S.domestic market. 
C) both a) and b) 
D) none of the above 
A) trade as Eurobonds overseas. 
B) trade as domestic bonds in the U.S.domestic market. 
C) both a) and b) 
D) none of the above

Question 10

A ten-year Floating-rate note (FRN)has coupons referenced to 3-month pound LIBOR,and pays coupon interest quarterly.Assume that the current 3-month LIBOR is 3 percent.If the risk premium above LIBOR that the issuer must pay is 1/8 percent,the next period's coupon rate on a £1,000 face value FRN will be

Accepted Answer

A) £31.25 
B) £15.625 
C) £30.625 
D) £7.8125 
A) £31.25 
B) £15.625 
C) £30.625 
D) £7.8125

Question 11

Global bond issues were first offered in

Accepted Answer

A) 1889 
B) 1989 
C) 1999 
D) 2007 
A) 1889 
B) 1989 
C) 1999 
D) 2007

Question 12

Zero-coupon bonds issued in 2006 are due in 2016.If they were originally sold at 55 percent of face value,the implied yield to maturity at issuance is

Accepted Answer

A) 1.062%. 
B) 6.16%. 
C) 8.31%. 
D) cannot be determined, need more information. 
A) 1.062%. 
B) 6.16%. 
C) 8.31%. 
D) cannot be determined, need more information.

Question 13

The vast majority of new international bond offerings

Accepted Answer

A) are straight fixed-rate notes. 
B) are callable and convertible. 
C) are convertible adjustable rate. 
D) are adjustable rate, with interest rate caps and collars. 
A) are straight fixed-rate notes. 
B) are callable and convertible. 
C) are convertible adjustable rate. 
D) are adjustable rate, with interest rate caps and collars.

Question 14

Consider a bond with an equity warrant.The warrant entitles the bondholder to buy 25 shares of the issuer at €50 per share for the lifetime of the bond.The bond is a 30-year zero coupon bond with a €1,000 par value that has a yield to maturity of i€ = 5 percent.The price of the bond is €500.What is the value of the warrant?

Accepted Answer

A) €231.38 
B) €268.62 
C) €500 
D) none of the above 
A) €231.38 
B) €268.62 
C) €500 
D) none of the above

Question 15

A bond market index

Accepted Answer

A) is a reference rate, like LIBOR, that adjustable rate bonds use to set the coupon. 
B) is analogous to a stock market index, but with bond price data instead of stock price data. 
C) represents a price-weighted average of all bonds that exist. 
D) none of the above 
A) is a reference rate, like LIBOR, that adjustable rate bonds use to set the coupon. 
B) is analogous to a stock market index, but with bond price data instead of stock price data. 
C) represents a price-weighted average of all bonds that exist. 
D) none of the above

Question 16

Suppose your firm needs to raise €100,000,000 with a one-year bond with a coupon rate of 8 percent per annum.The underwriting spread is 2 percent.What should the amount of the bond offering be?

Accepted Answer

A) €102,000,000 
B) €102,040,816.30 
C) €94,482,237 
D) €110,204,081.60 
A) €102,000,000 
B) €102,040,816.30 
C) €94,482,237 
D) €110,204,081.60

Question 17

The coupon interest on Eurobonds

Accepted Answer

A) is paid annually. 
B) is paid in cash. 
C) is paid in arrears. 
D) all of the above 
A) is paid annually. 
B) is paid in cash. 
C) is paid in arrears. 
D) all of the above

Question 18

A 1-year,4 percent euro denominated bond sells at par.A comparable risk 1-year,5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value.It sells for €1,250.What is the implied $/€ exchange rate at maturity?

Accepted Answer

A) €0.8300/$1.00 
B) $1.2048/€1.00 
C) $1.25/€1.00 
D) $1.50/€1.00 
A) €0.8300/$1.00 
B) $1.2048/€1.00 
C) $1.25/€1.00 
D) $1.50/€1.00

Question 19

The underwriting syndicate of a bond offering is

Accepted Answer

A) a group of investment banks, merchant banks, and the merchant banking arms of commercial banks that agree to buy the bond from the issuer and then resell it. 
B) a group of investment fund managers, brokers, and dealers who specialize in the secondary bond market. 
C) a group of investment banks, merchant banks, and the merchant banking arms of commercial banks that specialize in some phase of a public issuance. 
D) none of the above 
A) a group of investment banks, merchant banks, and the merchant banking arms of commercial banks that agree to buy the bond from the issuer and then resell it. 
B) a group of investment fund managers, brokers, and dealers who specialize in the secondary bond market. 
C) a group of investment banks, merchant banks, and the merchant banking arms of commercial banks that specialize in some phase of a public issuance. 
D) none of the above

Question 20

Securities sold in the United States to public investors must be registered with the SEC,and a prospectus disclosing detailed financial information about the issuer must be provided and made available to prospective investors.This encourages foreign borrowers wishing to raise U.S.dollars to use

Accepted Answer

A) the Eurobond market. 
B) their domestic market. 
C) bearer bonds. 
D) none of the above 
A) the Eurobond market. 
B) their domestic market. 
C) bearer bonds. 
D) none of the above

A "registered bond" is one that

Shelf registration

Find the yield to maturity for this floating rate note: The reset date is today; coupons are paid annually according to the formula (LIBOR + ¼ percent); since issuance,there has not been a change in the issuer's credit rating.The bond has ten years to maturity and LIBOR = 3.5 percent.

Investors in corporate bonds would still be interested in sovereign credit ratings

A "bearer bond" is one that

A five-year,4 percent euro denominated bond sells at par.A comparable risk five-year,5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value.It sells for €1,250.What is the implied $/€ exchange rate at maturity?

Bonds with equity warrants

A global bond issue denominated in U.S.dollars and issued by U.S.corporations

Global bond issues were first offered in

Zero-coupon bonds issued in 2006 are due in 2016.If they were originally sold at 55 percent of face value,the implied yield to maturity at issuance is

The vast majority of new international bond offerings

A bond market index

Suppose your firm needs to raise €100,000,000 with a one-year bond with a coupon rate of 8 percent per annum.The underwriting spread is 2 percent.What should the amount of the bond offering be?

The coupon interest on Eurobonds

A 1-year,4 percent euro denominated bond sells at par.A comparable risk 1-year,5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value.It sells for €1,250.What is the implied $/€ exchange rate at maturity?

The underwriting syndicate of a bond offering is

Securities sold in the United States to public investors must be registered with the SEC,and a prospectus disclosing detailed financial information about the issuer must be provided and made available to prospective investors.This encourages foreign borrowers wishing to raise U.S.dollars to use

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 12: International Bond Market

A "registered bond" is one that

Shelf registration

Find the yield to maturity for this floating rate note: The reset date is today; coupons are paid annually according to the formula (LIBOR + ¼ percent); since issuance,there has not been a change in the issuer's credit rating.The bond has ten years to maturity and LIBOR = 3.5 percent.

Investors in corporate bonds would still be interested in sovereign credit ratings

A "bearer bond" is one that

A five-year,4 percent euro denominated bond sells at par.A comparable risk five-year,5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value.It sells for €1,250.What is the implied $/€ exchange rate at maturity?

Bonds with equity warrants

A global bond issue denominated in U.S.dollars and issued by U.S.corporations

Global bond issues were first offered in

Zero-coupon bonds issued in 2006 are due in 2016.If they were originally sold at 55 percent of face value,the implied yield to maturity at issuance is

The vast majority of new international bond offerings

A bond market index

Suppose your firm needs to raise €100,000,000 with a one-year bond with a coupon rate of 8 percent per annum.The underwriting spread is 2 percent.What should the amount of the bond offering be?

The coupon interest on Eurobonds

A 1-year,4 percent euro denominated bond sells at par.A comparable risk 1-year,5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value.It sells for €1,250.What is the implied $/€ exchange rate at maturity?

The underwriting syndicate of a bond offering is

Securities sold in the United States to public investors must be registered with the SEC,and a prospectus disclosing detailed financial information about the issuer must be provided and made available to prospective investors.This encourages foreign borrowers wishing to raise U.S.dollars to use

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters