Fixed Income Securities

Duration can be explained as _________________.

• Weighted average Coupon

• Maturity in years

• Pay Back Period of cash flows

• Weighted average Cash flow

Which of the following is correct for Modified Duration?

• Percentage change in price with respect to change in yield

• Percentage change in yield with respect to change in maturity

• Percentage change in price with respect to change in maturity

• Modified Duration is linear

PVBP represents the _____________.

• Change in value of a Bond or portfolio, if the yield changes by 100 bps

• Change in value of a Bond or portfolio, if the yield changes by 1 bps

• Change in value of a Bond or portfolio, if the yield changes by 10 bps

• Change in value of a Bond or portfolio, if the yield changes by 50 bps

Which of the following is NOT relevant in a Sovereign Yield Curve?

• Inflation Risk

• Market Risk

• Concentration Risk

• Credit or Default Risk

Normal yield curve depicts: _________________.

• Short term yields are flat up to 1 year and then rises

• Higher short term yields, lower medium term yields and higher long term yields

• Short term yields are higher compared to medium term yields

• Long term yields are higher compared to short term yields

Market segmentation theory depicts that ______________.

• Bonds of different maturities are exact substitutes for each other

• Corporate Bonds pay higher premium

• Bonds of different maturities are not exact substitutes

• Government bonds pay safe returns

In which situation the Callable Bonds are likely to be "Called"?

• When the callable bond trades below Par

• When the callable bond trades at Par

• When interest rate is lower than the coupon rate

• When interest rate is high

The most important assumption of YTM is __________.

• Reinvestment of the future coupons at the same yield to maturity

• Reinvestment of the future coupons at different rate

• YTM is a flat curve after 15 years of maturity

• YTM is only relevant for G-Secs

The Spot Yield is explained as ____________.

• The yield which is converted into Dollar terms using spot exchange rate

• It is always derived from YTM

• A flat yield charged over the life of the Bond

• The yield relevant for a particular maturity

Which instrument is a discounted instrument at the time of its issue?

• Government Bonds

• Treasury Bills

• Corporate Bonds

• PSU Bonds