Question 1

Eurobonds are usually

Accepted Answer

A) registered bonds. 
B) bearer bonds. 
C) floating-rate, callable and convertible. 
D) denominated in the currency of the country that they are sold in. 
A) registered bonds. 
B) bearer bonds. 
C) floating-rate, callable and convertible. 
D) denominated in the currency of the country that they are sold in.

Question 2

Private placement bond issues

Accepted Answer

A) do not have to meet the strict information disclosure requirements of publicly traded issues. 
B) have auditing requirements that do no adhere to publicly traded issues. 
C) meet the strict information disclosure requirements of publicly traded issues, but have larger minimum denominations. 
D) none of the above 
A) do not have to meet the strict information disclosure requirements of publicly traded issues. 
B) have auditing requirements that do no adhere to publicly traded issues. 
C) meet the strict information disclosure requirements of publicly traded issues, but have larger minimum denominations. 
D) none of the above

Question 3

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 4

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 5

The Eurobond segment of the international bond market

Accepted Answer

A) is roughly four times the size of the foreign bond segment. 
B) has considerably less regulatory hurdles than the foreign bond segment. 
C) typically has a lower rate of interest that borrowers pay in comparison to Yankee bond financing. 
D) all of the above 
A) is roughly four times the size of the foreign bond segment. 
B) has considerably less regulatory hurdles than the foreign bond segment. 
C) typically has a lower rate of interest that borrowers pay in comparison to Yankee bond financing. 
D) all of the above

Question 6

A "Eurobond" issue is

Accepted Answer

A) one denominated in a particular currency but sold to investors in national capital markets other than the country that issued the denominating currency. 
B) usually a bearer bond. 
C) for example a Dutch borrower issuing dollar-denominated bonds to investors in the U.K., Switzerland, and the Netherlands. 
D) all of the above 
A) one denominated in a particular currency but sold to investors in national capital markets other than the country that issued the denominating currency. 
B) usually a bearer bond. 
C) for example a Dutch borrower issuing dollar-denominated bonds to investors in the U.K., Switzerland, and the Netherlands. 
D) all of the above

Question 7

The floor value of a convertible bond

Accepted Answer

A) is the "straight bond" value. 
B) is the conversion value. 
C) is the minimum of a and b. 
D) is the maximum of a and b. 
A) is the "straight bond" value. 
B) is the conversion value. 
C) is the minimum of a and b. 
D) is the maximum of a and b.

Question 8

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 9

U.S. security regulations require Yankee bonds and U.S. corporate bonds sold to U.S. citizens to be

Accepted Answer

A) municipal bonds. 
B) registered bonds. 
C) bearer bonds. 
D) none of the above 
A) municipal bonds. 
B) registered bonds. 
C) bearer bonds. 
D) none of the above

Question 10

U.S. citizens must pay tax on the imputed interest represented by the fact that zero coupon bonds price gets a bit closer to par value as each year goes by. If you have a 25-year zero coupon bond with $1,000 par value, how much imputed interest will you record in the coming year if interest rates stay the same at ten percent?

Accepted Answer

A) $92.30 
B) $9.23 
C) $0 
D) none of the above 
A) $92.30 
B) $9.23 
C) $0 
D) none of the above

Question 11

Because __________ do not have to meet national security regulations, name recognition of the issuer is an extremely important factor in being able to source funds in the international capital market.

Accepted Answer

A) Eurobonds 
B) Foreign bonds 
C) Bearer bonds 
D) Registered bonds 
A) Eurobonds 
B) Foreign bonds 
C) Bearer bonds 
D) Registered bonds

Question 12

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 13

Find the present value of a 30-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) €1,153.73 
D) none of the above 
A) €1,018.81 
B) €1,027.23 
C) €1,153.73 
D) none of the above

Question 14

Find the present value of a 2-year Treasury bond that pays a semi-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) $1,231.15 
C) $699.07 
D) none of the above 
A) $1,018.81 
B) $1,231.15 
C) $699.07 
D) none of the above

Question 15

On a reset date, floating-rate notes

Accepted Answer

A) experience very volatile price changes. 
B) market price will usually gravitate toward par. 
C) market price will usually gravitate toward par, unless the borrowers credit rating has declined. 
D) both b and c 
A) experience very volatile price changes. 
B) market price will usually gravitate toward par. 
C) market price will usually gravitate toward par, unless the borrowers credit rating has declined. 
D) both b and c

Question 16

Straight fixed-rate bond issues have

Accepted Answer

A) a designated maturity date at which the principal of the bond issue is promised to be repaid. During the life of the bond, fixed coupon payments, which are a percentage of the face value, are paid as interest to the bondholders. 
B) a designated maturity date at which the principal of the bond issue is promised to be repaid. During the life of the bond, coupon payments, which are a percentage of the face value, are computed according to a fixed formula. 
C) a fixed payment, which amortizes the debt, like a house payment or car payment. 
D) none of the above 
A) a designated maturity date at which the principal of the bond issue is promised to be repaid. During the life of the bond, fixed coupon payments, which are a percentage of the face value, are paid as interest to the bondholders. 
B) a designated maturity date at which the principal of the bond issue is promised to be repaid. During the life of the bond, coupon payments, which are a percentage of the face value, are computed according to a fixed formula. 
C) a fixed payment, which amortizes the debt, like a house payment or car payment. 
D) none of the above

Question 17

With a bearer bond,

Accepted Answer

A) possession is evidence of ownership. 
B) the issuer keeps records indicating only who the current owner of a bond is. 
C) the owner's name is on the bond. 
D) the owner's name is assigned to the bond serial number, but not indicated on the bond. 
A) possession is evidence of ownership. 
B) the issuer keeps records indicating only who the current owner of a bond is. 
C) the owner's name is on the bond. 
D) the owner's name is assigned to the bond serial number, but not indicated on the bond.

Question 18

Purchasers of global bonds are

Accepted Answer

A) mainly institutional investors to date. 
B) desirous of the increased liquidity of the issues. 
C) have been willing to accept lower yields. 
D) all of the above 
A) mainly institutional investors to date. 
B) desirous of the increased liquidity of the issues. 
C) have been willing to accept lower yields. 
D) all of the above

Question 19

The credit rating of an international borrower

Accepted Answer

A) depends on the volatility of the exchange rate. 
B) depends on the volatility, but not absolute level, of the exchange rate. 
C) is usually never higher than the rating assigned to the sovereign government of the country in which it resides. 
D) is unrelated to the rating assigned to the sovereign government of the country in which it resides. 
A) depends on the volatility of the exchange rate. 
B) depends on the volatility, but not absolute level, of the exchange rate. 
C) is usually never higher than the rating assigned to the sovereign government of the country in which it resides. 
D) is unrelated to the rating assigned to the sovereign government of the country in which it resides.

Question 20

Zero coupon bonds

Accepted Answer

A) pay interest at zero percent. 
B) are sold at a discount from par value. 
C) are attractive to Japanese investors who are not required to pay taxes on capital gains. 
D) both a and b. 
A) pay interest at zero percent. 
B) are sold at a discount from par value. 
C) are attractive to Japanese investors who are not required to pay taxes on capital gains. 
D) both a and b.

Eurobonds are usually

Private placement bond issues

A "registered bond" is one that

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 Eurobond segment of the international bond market

A "Eurobond" issue is

The floor value of a convertible bond

U.S. security regulations require Yankee bonds and U.S. corporate bonds sold to U.S. citizens to be

Because __________ do not have to meet national security regulations, name recognition of the issuer is an extremely important factor in being able to source funds in the international capital market.

Find the present value of a 30-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%.

Find the present value of a 2-year Treasury bond that pays a semi-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%.

On a reset date, floating-rate notes

Straight fixed-rate bond issues have

With a bearer bond,

Purchasers of global bonds are

The credit rating of an international borrower

Zero coupon bonds

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

Eurobonds are usually

Private placement bond issues

A "registered bond" is one that

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 Eurobond segment of the international bond market

A "Eurobond" issue is

The floor value of a convertible bond

U.S. security regulations require Yankee bonds and U.S. corporate bonds sold to U.S. citizens to be

Because __________ do not have to meet national security regulations, name recognition of the issuer is an extremely important factor in being able to source funds in the international capital market.

Find the present value of a 30-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%.

Find the present value of a 2-year Treasury bond that pays a semi-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%.

On a reset date, floating-rate notes

Straight fixed-rate bond issues have

With a bearer bond,

Purchasers of global bonds are

The credit rating of an international borrower

Zero coupon bonds

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