Question 1

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 C

Question 2

Suppose your firm issues a €100,000,000 one-year bond with a coupon rate of 8 percent per annum. The underwriting spread is 2 percent. Your actual cost of this debt is

Accepted Answer

A) 8 percent. 
B) 10 percent. 
C) 10.2 percent. 
D) None of the above 
A) 8 percent. 
B) 10 percent. 
C) 10.2 percent. 
D) None of the above C

Question 3

Find the price of a 30-year zero coupon bond with a €1,000 par value that has a yield to maturity of i€ = 5 percent.

Accepted Answer

A) €231.38 
B) €432.20 
C) €4,321.94 
D) none of the above 
A) €231.38 
B) €432.20 
C) €4,321.94 
D) none of the above A

Question 4

In terms of the types of instruments offered,

Accepted Answer

A) the Yankee bond market has been more innovative than the international bond market. 
B) the international bond market has been much more innovative than the U.S. market. 
C) the most innovations have come from Milan, just like any other fashion. 
D) none of the above 
A) the Yankee bond market has been more innovative than the international bond market. 
B) the international bond market has been much more innovative than the U.S. market. 
C) the most innovations have come from Milan, just like any other fashion. 
D) none of the above

Question 5

Find the present value of a 3-year bond that pays an annual coupon, has a coupon rate of 6%, a yield to maturity of 5%, a par value of €1,000 when the yield to maturity is 5%.

Accepted Answer

A) €1,018.81 
B) €1,027.23 
C) €1,099.96 
D) none of the above 
A) €1,018.81 
B) €1,027.23 
C) €1,099.96 
D) none of the above

Question 6

"Investment grade" ratings are in the following categories:

Accepted Answer

A) Moody's: AAA to BBB - S&P's: Aaa to Baa 
B) Moody's: Aaa to Baa - S&P's: AAA to BBB 
C) Moody's: AAA to A - S&P's: Aaa to A 
D) Moody's: Aaa to A - S&P's: AAA to A 
A) Moody's: AAA to BBB - S&P's: Aaa to Baa 
B) Moody's: Aaa to Baa - S&P's: AAA to BBB 
C) Moody's: AAA to A - S&P's: Aaa to A 
D) Moody's: Aaa to A - S&P's: AAA to A

Question 7

The vast majority of new international bond offerings

Accepted Answer

A) make annual coupon payments. 
B) have fixed coupon payments. 
C) have a fixed maturity. 
D) all of the above 
A) make annual coupon payments. 
B) have fixed coupon payments. 
C) have a fixed maturity. 
D) all of the above

Question 8

A convertible bond pays interest annually at a coupon rate of 5% on a par value of $1,000. The bond has 10 years maturity remaining and the discount rate on otherwise identical non-convertible debt is 6.5%. The bond is convertible into shares of common stock at a conversion price of $25 per share (i.e. the bond is exchangeable for 40 shares). Today's closing stock price was $20. What is the floor value of this bond?

Accepted Answer

A) $800.00 
B) $892.17 
C) $1,250 
D) None of the above 
A) $800.00 
B) $892.17 
C) $1,250 
D) None of the above

Question 9

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 10

Zero coupon bonds

Accepted Answer

A) have no interest income. 
B) are sold at a premium to par value. 
C) gave only capital gains income. 
D) both a and c 
A) have no interest income. 
B) are sold at a premium to par value. 
C) gave only capital gains income. 
D) both a and c

Question 11

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 12

Eurobonds sold in the United States may not be sold to U.S. citizens.

Accepted Answer

A) True 
 B)False

Question 13

"Yankee" bonds are

Accepted Answer

A) dollar-denominated foreign bonds originally sold to U.S. investors. 
B) yen-denominated foreign bonds originally sold in Japan. 
C) pound sterling-denominated foreign bonds originally sold in the U.K. 
D) none of the above 
A) dollar-denominated foreign bonds originally sold to U.S. investors. 
B) yen-denominated foreign bonds originally sold in Japan. 
C) pound sterling-denominated foreign bonds originally sold in the U.K. 
D) none of the above

Question 14

The J. P. Morgan and Company Global Government Bond Index is __________ representation of the individual country government bond indexes.

Accepted Answer

A) a value weighted 
B) a price weighted 
C) an unweighted 
A) a value weighted 
B) a price weighted 
C) an unweighted

Question 15

There are two types of equity related bonds:

Accepted Answer

A) convertible bonds and dual currency bonds. 
B) convertible bonds and kitchen sink bonds. 
C) convertible bonds and bonds with equity warrants. 
D) callable bonds and exchangeable bonds. 
A) convertible bonds and dual currency bonds. 
B) convertible bonds and kitchen sink bonds. 
C) convertible bonds and bonds with equity warrants. 
D) callable bonds and exchangeable bonds.

Question 16

With regard to clearing procedures for bond transactions, when a transaction is conducted, electronic book entries are made that transfer book ownership of the bond certificates from the seller to the buyer and transfer funds from the purchaser's cash account to the seller's. However,

Accepted Answer

A) physical transfer of the bonds seldom takes place. 
B) the physical transfer of the bonds takes place as much as 3 days later. 
C) the physical transfer of the bonds takes place as much as 6 weeks later. 
D) the physical transfer of bonds only occurs if the depository banks that physically store bond certificates are different for the buyer and seller. 
A) physical transfer of the bonds seldom takes place. 
B) the physical transfer of the bonds takes place as much as 3 days later. 
C) the physical transfer of the bonds takes place as much as 6 weeks later. 
D) the physical transfer of bonds only occurs if the depository banks that physically store bond certificates are different for the buyer and seller.

Question 17

Consider an 8.5 percent Swiss franc/U.S. dollar dual-currency bonds that pays $666.67 at maturity per SF1,000 of par value. If the bond sells at par, what is the implicit SF/$ exchange rate at maturity? Will the investor be better or worse off at maturity if the actual SF/$ exchange rate is SF1.35/$1.00?

Accepted Answer

A) SF1.5/$1.00; better off 
B) SF1.5/$1.00; worse off 
A) SF1.5/$1.00; better off 
B) SF1.5/$1.00; worse off

Question 18

The role of an underwriter is to

Accepted Answer

A) help negotiate terms with the borrower. 
B) ascertain market conditions. 
C) manage the issuance. 
D) all of the above. 
A) help negotiate terms with the borrower. 
B) ascertain market conditions. 
C) manage the issuance. 
D) all of the above.

Question 19

A 2-year, 4 percent euro denominated bond sells at par. A comparable risk 2-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) €0.8265/$1.00 
B) $1.2099/€1.00 
C) $1.25/€1.00 
D) $1.50/€1.00 
A) €0.8265/$1.00 
B) $1.2099/€1.00 
C) $1.25/€1.00 
D) $1.50/€1.00

Question 20

Euro-medium term notes

Accepted Answer

A) are typically fixed-rate corporate notes issued with maturities ranging from less than a year to about ten years. 
B) are typically fixed-rate corporate notes issued with maturities ranging from three years to about ten years. 
C) are sold just like bonds in the primary market. 
D) none of the above 
A) are typically fixed-rate corporate notes issued with maturities ranging from less than a year to about ten years. 
B) are typically fixed-rate corporate notes issued with maturities ranging from three years to about ten years. 
C) are sold just like bonds in the primary market. 
D) none of the above

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

Suppose your firm issues a €100,000,000 one-year bond with a coupon rate of 8 percent per annum. The underwriting spread is 2 percent. Your actual cost of this debt is

Find the price of a 30-year zero coupon bond with a €1,000 par value that has a yield to maturity of i_€ = 5 percent.

In terms of the types of instruments offered,

Find the present value of a 3-year bond that pays an annual coupon, has a coupon rate of 6%, a yield to maturity of 5%, a par value of €1,000 when the yield to maturity is 5%.

"Investment grade" ratings are in the following categories:

The vast majority of new international bond offerings

A "bearer bond" is one that

Zero coupon bonds

The underwriting syndicate of a bond offering is

Eurobonds sold in the United States may not be sold to U.S. citizens.

"Yankee" bonds are

The J. P. Morgan and Company Global Government Bond Index is __________ representation of the individual country government bond indexes.

There are two types of equity related bonds:

With regard to clearing procedures for bond transactions, when a transaction is conducted, electronic book entries are made that transfer book ownership of the bond certificates from the seller to the buyer and transfer funds from the purchaser's cash account to the seller's. However,

The role of an underwriter is to

A 2-year, 4 percent euro denominated bond sells at par. A comparable risk 2-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?

Euro-medium term notes

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

Suppose your firm issues a €100,000,000 one-year bond with a coupon rate of 8 percent per annum. The underwriting spread is 2 percent. Your actual cost of this debt is

Find the price of a 30-year zero coupon bond with a €1,000 par value that has a yield to maturity of i€ = 5 percent.

In terms of the types of instruments offered,

Find the present value of a 3-year bond that pays an annual coupon, has a coupon rate of 6%, a yield to maturity of 5%, a par value of €1,000 when the yield to maturity is 5%.

"Investment grade" ratings are in the following categories:

The vast majority of new international bond offerings

A "bearer bond" is one that

Zero coupon bonds

The underwriting syndicate of a bond offering is

Eurobonds sold in the United States may not be sold to U.S. citizens.

"Yankee" bonds are

The J. P. Morgan and Company Global Government Bond Index is __________ representation of the individual country government bond indexes.

There are two types of equity related bonds:

With regard to clearing procedures for bond transactions, when a transaction is conducted, electronic book entries are made that transfer book ownership of the bond certificates from the seller to the buyer and transfer funds from the purchaser's cash account to the seller's. However,

The role of an underwriter is to

A 2-year, 4 percent euro denominated bond sells at par. A comparable risk 2-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?

Euro-medium term notes

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

Find the price of a 30-year zero coupon bond with a €1,000 par value that has a yield to maturity of i_€ = 5 percent.