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Question 50 some form of collateral is pledged to

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Question50Some form of collateral is pledged to ensure the payment of debt for:A) highly rated sovereign bonds.B) secured corporate debt.C) unsecured corporate debt.AnswerB)secured corporate debt.ExplanationB is correct. In case of secured corporate debt, some form of collateral is pledged to ensure the payment of thedebt. In case of unsecured debt, claims are settled by the general assets of the company. Highly rated sovereignbonds are not exposed to great credit risk. Section 6.3. LO.g.
Question51A company issued bonds where a stated number of bonds will mature each year before maturity. These bondsmost likelyhave a:
Question52The issuer of the fixed income security canmost likelybenefit from:
Question53A bond issue that has a random number of bonds that mature and are paid off each year before final maturitymost likelyhas a:
Q-Code: L1-FI-FIMI-003LOS aSection 6Question54Which of the following principal repayment structures allows for retirement of bond on an annual basis through arandom drawing?B) serial maturity.C) sinking fund arrangement.AnswerC)sinking fund arrangement.ExplanationC is correct. A sinking fund arrangement, like a serial maturity structure, results in a portion of the bond issue beingpaid off every year. However, with a serial maturity structure, the bonds are paid off because the maturity datesare spread out during the life of the bond and the bonds that are retired are maturing; the bondholders know inadvance which bonds will be retired. In contrast, the bonds retired annually with a sinking fund arrangement aredesignated by a random drawing. A is incorrect because a bond issue with a term maturity structure is paid off inone lump sum at maturity. Section 6.3. LO.g.A) Serial maturity structure.B) Sinking fund arrangement.C) Term maturity structure.AnswerB)Sinking fund arrangement.ExplanationB is correct. A sinking fund arrangement allows for the retirement of bond on an annual basis based on a randomdrawing. In a serial maturity structure, the bond matures in parts on several dates throughout the bond’s life. Theprincipal is repaid in parts instead of paying a lump sum at maturity. In a term maturity, bond’s entire principal ispaid at once on maturity. It carries more credit risk. Section 6.3. LO.a.
Q-Code: L1-FI-FIMI-054LOS hSection 8Question55Which of the following isnotconsidered a retail fund?
Q-Code: L1-FI-FIMI-055LOS hSection 8Question56Which of the following certificates of deposit (CD) allows an investor to sell the CD in the open market prior to thematurity date?
Q-Code: L1-FI-FIMI-053LOS hSection 8Question57Analyst 1: A non-negotiable certificate of deposit has a penalty for early withdrawal of funds.Analyst 2: A negotiable certificate of deposit has a penalty for early withdrawal of funds.Which analyst’s statement ismost likelycorrect?
Q-Code: L1-FI-FIMI-056LOS hSection 8Q-Code: L1-FI-FIMI-057LOS hSection 8Q-Code: L1-FI-FIMI-058LOS hSection 8Q-Code: L1-FI-FIMI-059LOS hSection 8B) Analyst 2.

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