WorksheetsFM 4 - 5
Total questions: 62
Worksheet time: 31mins
Which sentence is not true for the unsecured bonds?
Unsecured bonds are issued without any pledged assets
Unsecured bonds are secured by the prestige of the issuing organizations
Unsecured bonds are secured by the common assets of the issuers in the event of bankruptcy
Unsecured bonds will receive nothing from issuers in the case of bankruptcy
Which of the following sentences is true for Treasury Inflation protected securities (TIPS)?
Coupon rate is set at a fixed rate, and the principal is fixed
Coupon rate is adjusted for inflation, and the principal is fixed
Coupon rate is set at a fixed rate, and the principal is adjusted semiannually for inflation
Coupon rate is adjusted for inflation, and the principal is adjusted for inflation
Which sentence is not true for high yield bond?
The firm issuing the bond is of high quality
The bond is rated below investment grade by the credit rating agencies
This type of bonds is riskier than low yield bond
B&C
Par value of bond is …
The amount on which the issuer sell bond to investor
The amount on which the issuer has to be repaid at the end of the term
The buying price of the bonds at the time of issuance
The amount paid to bond holder between two interest payment times
Why are bonds considered to be more stable and less risky than stocks?
Bonds do not gain any kind of ownership rights to the issuer, unlike in the case of equities
Bonds have priority on payment over the dividends paid to shareholders
Bonds have a greater claim on remaining assets than a shareholder in the case of liquidation
B and C
Term to maturity of bond is…
The period calculated from selling date to the Maturity date
1 year
The period calculated from buying date to selling date
The period calculated from issue date to maturity date
As compared to non-convertible bonds, yield on convertible bond is
Relatively lower
Relatively higher
Relatively zero
Relatively discounted
Which of the following statement is not correct?
Bond is a type of securities that certify the legitimate rights and interests owners for a part of the issuer’s equity
A debt instrument issued for a period of more than one year with the purpose of rasing capital by borrowing
Bond is a promise to repay the principal along with interest (coupons) on a specified date (maturity)
Bond usually has fixed interest (coupons) rate over its term to maturity
Which type of bond is issued by local authorities?
Short-term bond
Municipal bond
Government bond
Corporate bond
Junk bonds which are rated lower than triple B are also classified as:
High yield bonds
Low yield bonds
Zero floating bonds
High floating rate bonds
… is the market through which Government can plan and implement different monetary policies
Open market
Credit market
Interbank market
Money market
In domestic debt market, … are trading:
Instruments sell abroad
Instruments sell domestically
Instruments issued in foreign currencies
Instruments issued in domestic currencies
Which type of instruments is not defined as debt instruments?
Term loans
Bond
Unsecured notes
Stock
… is a kind of bond that its principal amount and the interest payments are indexed to the price index such as inflation
Junk bond
Linker
Perpetuity
Municipal bond
Which kind of bond pays no regular interest?
Floating rate note
Perpetual bond
Coupon bond
Zero-coupon bond
According to Fitch's Rating system, debt instruments with lowest default risk and highest credit quality are assigned rating of
BB
BBB
AAA
AA
… is often exempt from the federal income tax and from the income tax of the state in which they are issued
Municipal bond
Treasury bond
Corporate bond
International bond
Which type of bonds has a coupon that remains constant throughout the life of the bond?
Coupon bond
Floating rate note
Zero-coupon bond
Deep discount bond
Debt instruments represent a contractual claim against an issuer to make specific payments, including …, over a defined period
Periodic interest payments
Principal repayments
Both of the above
None of the above
Treasury bills are issued on:
Premium basis
Corporate basis
Treasury basis
Discount basis
… is a type of bond that, upon its issuance, the bond certificate shows a provision that allows the issuing organization to buy part or the entire of the bond before its maturity
Callable bond
Registed bond
Warrant bond
Convertible bond
Treasury notes that provide returns tied to inflation rate are classified as
Discount index bonds
Clean price bonds
Premium index bonds
Inflation index bonds
What is NOT the characteristic of debt market?
Instruments in debt market have no maturities
The issuer in debt market takes out the loan in the manner of repayment of both principal and interest
Operations of the debt market depend remarkably on the fluctuations of market interest rate
The investor assumes no responsibility for the issuer’s results and in any case, the issuer shall be responsible to repay under the specified commitments agreed when issuing debt instruments
Which kind of bonds allows for exchange to shares of a corporation other than the issuer?
Callable bond
Exchangeable bond
Government bond
Convertible bond
Stock markets in which already issued stocks are resold and re-bought are classified as
Red herring stock markets
Preemptive stock markets
Silence stock markets
Secondary stock markets
Right of stockholders of firm that new shares must be offered to existing stockholders first, rather than new stockholders is classified as
Non offered rights
Preemptive rights
Existing rights
Securitize rights
Which of the following statements is incorrect concerning private placements?
Terms of the financing can be custom-tailored
The securities are not made available to the public
The securities are often less marketable
Only a small amount of corporate debt is financed in this manner
… is a method that the middleman commits with issuing company to complete issuing preparation procedures, to buy a certain amount of issuing security or to buy all unsubscribed issuing shares
Initial Public Offering
Direct Public Offering (DPO)
Second Public Offering
Issue Underwriting
Which type of underwriter agrees to purchase the portion of the new securities issue that remains after a public offering?
Firm Commitments
Best efforts
Stand-by underwriting
All or none
In Vietnam, requirement conditions of public offering are
Charter capital is at Jeast 30 billion VND
Charter capital is at least 25 billion VND
Charter capital is at least 80 billion VND
All of the above
A market where new securities are bought and sold for the first time is known as a ... market
Primary
Secondary
Tertiary
Capital
The cases in which a company chooses the private offering rather than publie offering are:
1. The company couldn't meet requirements of public offering
2. The number of securities issued is too large
3. It allows company to choose investors, that help company strengthen their business relationship
4. Investor with similar objective can provide business advice and assistance, as well as funding
1
1,2,3
1,3,4
1,2,3,4
Which sentence is true for direct public offering?
Save issuing cost
Save time of the offering
The success of the offering is always guaranteed
It can't eliminate the middlemen
Which sentence is not true when refers to characteristics of primary securities market?
The market operates infrequently
The issuers receive the money in return of selling new securities to the investors
Primary market performs the crucial function of facilitating long-term capital
formation in the economy
The volume and transaction speed of the primary market are higher than those of secondary market
Which of the following is a capital market security?
Commercial papers
Federal agency bonds
Treasury bills
Eurodollars
Most bonds:
Are ranked after stocks in term of remaining assets upon liquidation
Give bondholders a voice in the affairs of the corporation
Are floating-rate securities
Are interest-bearing obligations of governments or corporations
Which method below is a type of public offering?
Direct Public Offering
Issue underwriting
Both of the above
None of the above
… is a type of offering in which a company offers its securities without the middlemen-investment banks, broker-dealers, and underwriters.
Direct Public Offering
Issude underwriting
Auction or bidding method
Indirect public offering
A firm’s first offering of stock to the general public is known as
First-stage financing
An initial public offering (IPO)
A general cash offer
A seasoned offering
What is the role of the underwriter in an issue of securities?
Underwriters manage the sale of the securities and advise on the price at which the issue is sold. Then they buy the securities from the issuing company, and resell them to the public
The difference between the price at which the underwriter buys the securities and the price at which they are resold is the underwriter’s spreed. Underwriting firms have expertise in such sales because they are in the business all the time, whereas the company raises capital only occasionally
Both A and B
Neither A and B
A market for relatively long-term (at least one-year original maturity) financial instruments is known as the … market
Capital
Primary
Secondary
Tertiary
A market for existing securities rather than new issues is known as the … market
Primary
Secondary
Tertiary
Capital
Characteristic of primary market is
Operate frequently
The investor receives the money in return of selling securities
Perform the function of facilitate long-term capital formation
The volume and transaction speed are higher than those of secondary market
Which sentence is not true for issue underwriting?
Lower cost
Underwriter help issuers review financial management
Ensure a higher degree of success of the issue
Save time
Which sentence is not true when refers to private placement in Vietnam?
A private placement of securities is an arrangement for offering securities without using the mass media or the Internet
Issuers can organize small conferences with potential investors
A private placement of securities is an arrangement for offering securities to less than 100 investors excluding institutional investors
A private placement of securities is an arrangement for offering securities to at least 100 investors excluding institutional investors
Which is true for the reasons of private placement?
Facilitate tightening business relationships with business partners
The company does not want to share the ownership with outside investors
Encouraging the working spirit of staffs
All of the above
Which is true for the reasons of public offering?
The amount of capital needed is small
The company does not want to share the ownership with outside investors
The company wants to enhance its prestige
All of the above
… is a type offering in which the issuers themselves conduct all the steps of public offering
Issue underwriting
Direct public offering
Auction or bidding method
Indirect public offering
A company intends to issue rights. Which is the best type of underwriting the company should use?
Firm Commitments
Best efforts
Stand-by underwriting
All or none
A company intends to mobilize 10 billion VND to invest in a new project. It is cannot mobilize this amount of money, ???? project cannot be implemented. Which is the best type of underwriting the company should use?
Firm Commitments
Best efforts
Stand-by underwriting
All or none
A major purpose of the prospectus is to:
Inform investors of the security's rate of return
Advise investors of the security's potential risk
Distribute stock warrants to prospective
List the security's dividend payment date
In Vietnam, public offering of sedcurities is the sale of securities to … investors
10 investors excluding institutional investors
Exactly 100 investors excluding institutional investors
Less than 100 investors excluding institutional investors
At least 100 investors excluding institutional investors
The New York Stock Exchange (NYSE) can be considered as being a part of the … and the …
Capital market; money market
OTC market, secondary market for long-term securities
Secondary market for long-term securities, capital market
Capital market, primary market for long-term securities
Which type of underwriting requires the highest fee?
Firm Commitments
Best efforts
Stand by underwriting
All or none
In Vietnam, which case below is not public offering?
A. A company offers stocks to 105 investors in which 10 investors are institutional investors
B. A company offers stock to 100 employees
C. A company offers stocks to an unspecified number of investors
D. A company offers stocks through mass media, including the internet
Which sentence is true for direct public offering?
Increase issuing/cost
Save time of the offering
The success of the offering is always guaranteed
Eliminate the middlemen
In Vietnam, Private placement of securities is an arrangement for offering securities to … investors not including institutional investors
1000 investors
100 investors
Less than 100 investors
More than 100 investors
Which of the following is disadvantage of private placement?
The offering procedure is quite complicated
The amount of capital mobilized is quite small
Encouraging the working spirit of staffs
Issuing costs are relatively low
Which sentence is true for competitive traders?
A. They are members who buy and sell securities for their own accounts
B. They can earn a lot of profits but are also likely to face many risks
C. They are the intermediaries between the buyer and the seller
D. a&b
Which type of underwriting is the riskiest one (from the underwriter’s view)?
A. Firm Commitments
B. Best efforts
C. Stand-by underwriting
D. All or none
Which of the following is not a method a firm can use to publicly issue common stock?
Private placement
Firm commitment underwriting
Shelf registration
Best efforts offering
Which type of underwriting in which underwriter agrees to purchase the portion of the new securities issue that remains after a public offering?
Firm Commitments
Best offorts
Standby underwriting
All or none
