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Asset Classes - Debt types & features Flashcards

(72 cards)

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1
Q

What is a method of raising mezzanine debt?

A

Issuing payment in kind notes

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2
Q

Index-linked gilts

A

Both the coupon and the redemption value are index-linked

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3
Q

When creating an asset-backed security, to keep the instrument off-balance sheet, which of the following is used?

A

SPV

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4
Q

What is the order of priority in a winding-up?

A

Debentures. Guaranteed bond. Subordinated loan stock. Ordinary shares.

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5
Q

Which pay interest semi-annually?

A

US Tbonds

JGBs

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6
Q

Who are municipal bonds best suited for?

A

US investors living in the issuing state

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7
Q

Credit enhancements are

A

tools used by an issuer to enable bonds to be more highly-rated.

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8
Q

Which of the following is the most common form of security for debentures?

A

Fixed charge over property.

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9
Q

Which of the following asset classes can be broken into tranches offering different levels of risk and return?

A

Mortgage-backed securities

Collateralised debt obligations.

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10
Q

What does the term mezzanine capital refer to?

A

Unsecured high-yield debt that represents a claim on a company’s assets.

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11
Q

When a government bond is stripped

A

the income streams are treated as separate securities

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12
Q

In relation to the international government bond market

A

Bobls are German bonds paying annual coupons

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13
Q

Which of the following corporate debt securities is secured against a particular asset of a company?

A

Fixed charge

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14
Q

Which of the following is least likely about bonds

A

Prices are typically quoted dirty

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15
Q

Inters rates on index-linked gilts are linked to

A

Retail price index

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16
Q

If the credit rating on a corporate bond is upgraded

A

coupon will remain the same and the prices will rise

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17
Q

Bonds issued by US Treasury

A

coupons are paid semi-annually

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18
Q

Asian Development Bank

A

would issues supranational bonds

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19
Q

CCC

A

represents the credit rating of a non-investment grand bond

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20
Q

The different yields between conventional and index-linked gilts may be viewed as reflecting

A

long-term inflation rates

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21
Q

Schatz

A

life of less than 5 years when issued

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22
Q

Patrick observes that the effective price per share from a convertible bond is lower than the current market price of the underlying shares. how can he profit from this observation?

A

Buy the convertible and sell the underlying shares.

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23
Q

Zero-dividend preference shares

A

are paid out first on a liquidation

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24
Q

Stripped government bonds

A

Zero coupon

Tradable

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25
Payment in kind notes are issued with
Mezzanine debt
26
CREST
is not permitted to strip a gilt
27
German bunds settle
T+2
28
Bearer document
sterling ond issued in the US, China and throughout the Eurozone
29
A company could issue bonds in order to satisfy the needs of investors that wish to invest in it, with the coupon rate and maturity set according to market demand. This is an example of
Medium term notes
30
Bobls
Issued by the German government | Maturity of 5 years.
31
Where a bond issuer has set aside a certain amount each year to buy back a certain number of bonds which are deemed callable they would have set up a
Sinking fund
32
French bonds settle
T+2
33
US T Bonds settle
T+1
34
JGB settle
T+1
35
Medium-term notes generally have a life to maturity of
2-10 years.
36
A guaranteed bond of a company is generally guaranteed by
a company in the same group
37
Convertible bond
similar to purchasing a non-convertible bond and being long an American style stock option
38
Convertible bond
may be in a different currency to the converted shares
39
Convertible bond
acts an option to purchase shares in the issuing company at the discretion of the buyer
40
JGB
paid semi annually
41
JGB
repayable on specific date common maturity of 10 years either register or bearer
42
French OAT
pays annual coupon
43
Bobls have a life of
3-5 years
44
German government bonds
Bund and Bobl
45
10 year strippable government bond can be stripped into
21 individual strips
46
Freddie Mac
Federal home loan mortgage corporation
47
Effect on price of convertible loan stock if share prices fall
Price of convertible falls
48
US local government bonds are also known as
municipal bonds
49
Repo rate
derived from gilt sale and repurchase
50
US Bonds
Registed | Not issued with a zero-couon
51
Bobl
German govt bond with maturity of 3 and 5 years.
52
BBB-
lowest S&P rating for investment grade debt
53
Index linked government bonds
Pay a low coupon Coupon varies with inflation Range of maturities are available
54
Eurobonds
Fixed coupon | Bearer form
55
Vanilla convertible bond usually pays
fixed coupon
56
Immobilisation
placement of bearer securities with a centralised depository
57
JGB issued with a maturity of
10 years
58
Mezanine debt
carries a greater degree of risk than subordinated debt
59
A bond which has just defaulted on a coupon payment would be rated by S&P as
D
60
During a period of zero inflation what is the impact on the coupon of an index-linked gilt?
The coupon will be unadjusted in that period
61
In relation to seniority where would mezzanine debt be placed?
Above preference shares and below subordinated debt
62
Why would a company prefer to issue a convertible bond rather than issue shares to finance a takeover?
To benefit from lower initial servicing costs
63
Which of the following is not an issuer of mortgage-backed securities in the US?
Government Home Mortgage Corporation
64
Holders of subordinated debt rank above which of the following instruments?
Preference shares
65
According to the credit ratings agency Moody's what credit rating would be issued to a bond in default?
C
66
Which of the following best describes a mortgage-backed security?
Bonds created when a group pf mortgage loans are pooled together to be sold to investors.
67
TRAX
system for reporting eurobond trades
68
Clean price of a gilt means
excluding accrued interests
69
What would a bond spread normally be described as?
Difference between the bond's yield and the yield on a benchmark gilt
70
The life of an OAT is typically
2-50 years
71
JGB settle
T+1
72
Which of the following might describe the difference between government expenditure and revenue?
The deficit

Securities (19 decks)

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