ECON 101 FIXED INCOME FOR BEGINNER (QUIZ A)

Which of the following are the key capital market issuers (borrowers)?

i) Pension Fund

ii) Government

iii) Quasi Government

iv) Corporates

• i ) only

• ii and iii

• i, ii and iii

• ii, iii and iv

• All of the above.

The central bank in Australia is called as:

• Bank of Australia

• The Federal Reserve of Australia

• Australian Central Bank

• Reserve Bank of Australia

• Bank Negara Australia

What is the official interest rate called in the U.S?

• Fed Fund Rate

• Overnight Policy Rate

• Cash Rate

• Central Bank Rate

• Main Refinancing Operation Rate

Who is making a call to change the official interest rate of the country?

• The government

• The central bank

• The investors

• The financial institution

Which of the following credit ratings IS NOT an investment grade (assuming rated by S&P credit ratings)?

• AAA

• BBB-

• BB+

• BBB+

A US corporation with credit ratings of BBB+ is issuing a straight bond for 10 years tenure. The existing 10-Year UST yield to maturity is 1.5%. Which of the following statement is true?

• The US corporate bond yield should be issued at YTM "LOWER" than 1.5%.

• The US corporate bond yield should be issued at YTM "EQUAL" to 1.5%

• The US corporate bond yield should be issued at YTM "HIGHER" than 1.5%

• The US corporate bond is a "Non-Investment Grade" bond.

• The US Corporate bond is a "High Yield Bond"

A bond with a face value of USD100 is currently trading at USD110. Is it trading at Premium, Par or Discount?

• Premium

• Par

• Discount

A bond with coupon rate of 5% is trading at the YTM of 8%. Is the bond trading at Premium, Par or Discount price?

• Premium

• Par

• Discount

Bond prices fluctuate after the issuance date and before the maturity date when the yield environment changes.

Is the above statement True or False?

• True

• False

If a bond duration is 10 years, what is the estimated bond price change in percentage if the yield goes UP by 1%?

• Bond price increase by 9%.

• Bond price increase by 10%.

• Bond price decrease by 9%.

• Bond price decrease by 10%

• Give me a break, I have no idea!