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Finance exam 2

Terms in this set (43)

Ratio which is often used as an indicator of the success of US treasury and other auctions is called
bid-to-cover
What are the three basic items you should always look at when considering the purchase of a bond or a bond fund
credit rating, duration, yield to maturity
Stripped treasury securities are zero-coupon instruments that, while not issued by US govt. are backed by Treasury securities from which they are created
TRUE
Revenue bond is issued for either project or enterprise financings where the bond issuer pledges the revenues generated by the project that is financed to the bondholders
TRUE
What is slang for a preliminary prospectus
Red Herring
Compared to US treasury market, most issues in municipal bond markets are ___ liquid
less
In a ___ system, additional bonds of a previous bond issue are auctioned where the government announces periodically that it is adding new supply
Tap
Goldman Sachs limiting analysts work ___ hours a week
75
If interest rate decline , market price of bond with fixed coupon will be ____ than it was before the decline
higher
When short term rates are lower than long term interest rates, this relationship is desired as ____ by bond professionals
normal
Google used this form of pricing in IPO
Dutch auction
US treasury issues new bonds and yield pays are determined by ____
competitive bids
Upward sloping yield curve implies that interest rates are going to rise --- expectations theory ---
True
Bond dealers primarily make money by charing ___ on transactions
spread
B rated bong would be expected to have a higher yield than a BBB rated bond and lower quality
...
Who is the bond king that resigned at PIMCO
Bill Gross
Who is suing the government over the bailout of AIG
Hank Greenberg
What number is the 9 digit number to identify a securities issuer and specific type of security?
CUSIP
What is a broker that acts on behalf of an investor who wishes to execute orders?
Dealer
What is SEC rule 415 referred to as
shelf registration
What will get you excited about a PO but the risk factors section will almost always dampen enthusiasm
prospectus summary
The function of buying securities from the issuer is called
Underwriting
Equivalent taxable yield formula
yield / (1 - marginal tax rate)
Return formula
end value - beg value +cash distributions all divided by beginning value
What is the highest grade of bond designated by Moodys symbol
Aaa
What is the highest grade of bond that S&P and Fitch use?
AAA
Who took advantage of new three week warning?
Twitter
If interest rates are going up, you want a
short duration bond
In absence of inflation, nominal rate =
real rate
What are the tails of common stock return?
They are where the extreme values occur
If congress raises US marginal income tax rates, the price of tax - exempt muni bonds will
likely rise
What would you call a bond backed by a portfolio of US treasury securities established by a bond issuer?
A prerefunded bond
relatively new type of US treasury security called a ____ was first issued in 2013
two year floating rate note
A bond with a YTM below its coupon rate is said to be at a
premium
____ postulates that a securities expected return is influenced by multiple factors
Arbitrage pricing theory
____ is an obligation of a countries central government
soveirgn debt
When putting together IPOs, underwriting syndicates and selling groups are formed by ___
investment bankers
___ indicated that they will not longer invest in hedge funds
CALPERS
interest income from treasury securities is subject to federal income taxes but is exempt from
state and local income taxes
A market structure where all incoming orders are grouped together throughout the day are simultaneous execution at same price is known as a
call market
CAPM formula
...
Municipal security with a maturity date in 5 years at time of issuance would be called a
bond
Municipal securities are issued by
state and local governments
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