Question 50 some form of collateral is pledged to

Question
50 Some 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.
Answer B) secured corporate debt.
Explanation B is correct. In case of secured corporate debt, some form of collateral is pledged to ensure the payment of the
debt. In case of unsecured debt, claims are settled by the general assets of the company. Highly rated sovereign
bonds are not exposed to great credit risk. Section 6.3. LO.g.
Question
51 A company issued bonds where a stated number of bonds will mature each year before maturity. These bonds
most likely have a:
Question
52 The issuer of the fixed income security can most likely benefit from:
Question
53 A bond issue that has a random number of bonds that mature and are paid off each year before final maturity
most likely has a:

Q-Code: L1-FI-FIMI-003 LOS a Section 6 Question
54 Which of the following principal repayment structures allows for retirement of bond on an annual basis through a
random drawing?
B) serial maturity.
C) sinking fund arrangement.
Answer C) sinking fund arrangement.
Explanation C is correct. A sinking fund arrangement, like a serial maturity structure, results in a portion of the bond issue being
paid off every year. However, with a serial maturity structure, the bonds are paid off because the maturity dates
are spread out during the life of the bond and the bonds that are retired are maturing; the bondholders know in
advance which bonds will be retired. In contrast, the bonds retired annually with a sinking fund arrangement are
designated by a random drawing. A is incorrect because a bond issue with a term maturity structure is paid off in
one lump sum at maturity. Section 6.3. LO.g.
A) Serial maturity structure.
B) Sinking fund arrangement.
C) Term maturity structure.
Answer B) Sinking fund arrangement.
Explanation B is correct. A sinking fund arrangement allows for the retirement of bond on an annual basis based on a random
drawing. In a serial maturity structure, the bond matures in parts on several dates throughout the bond’s life. The
principal is repaid in parts instead of paying a lump sum at maturity. In a term maturity, bond’s entire principal is
paid at once on maturity. It carries more credit risk. Section 6.3. LO.a.
Q-Code: L1-FI-FIMI-054 LOS h Section 8 Question
55 Which of the following is not considered a retail fund?
Q-Code: L1-FI-FIMI-055 LOS h Section 8 Question
56 Which of the following certificates of deposit (CD) allows an investor to sell the CD in the open market prior to the
maturity date?
Q-Code: L1-FI-FIMI-053 LOS h Section 8 Question
57 Analyst 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 is most likely correct?

Q-Code: L1-FI-FIMI-056 LOS h Section 8
Q-Code: L1-FI-FIMI-057 LOS h Section 8
Q-Code: L1-FI-FIMI-058 LOS h Section 8
Q-Code: L1-FI-FIMI-059 LOS h Section 8
B) Analyst 2.