CFS CFS Fixed Income & Bonds

Question 1

Which bond characteristic measures the sensitivity of a bond's price to changes in interest rates?

Accepted Answer

Duration

Answer

Convexity

Answer

Yield to maturity

Answer

Current yield

Question 2

A bond is said to be trading at a 'discount' when its market price is:

Accepted Answer

Below its par value

Answer

Above its par value

Answer

Equal to its par value

Answer

Equal to its coupon rate

Question 3

What is the primary risk associated with callable bonds from an investor's perspective?

Accepted Answer

Reinvestment risk

Answer

Credit risk

Answer

Liquidity risk

Answer

Currency risk

Question 4

Which rating from Moody's indicates the highest investment-grade bond quality?

Accepted Answer

Aaa

Answer

AAA

Answer

Aa1

Answer

A1

Question 5

The yield curve is considered 'inverted' when:

Accepted Answer

Short-term yields are higher than long-term yields

Answer

Long-term yields are higher than short-term yields

Answer

All maturities have the same yield

Answer

Only Treasury yields are declining

Question 6

Which type of bond has its principal and interest payments adjusted based on inflation?

Accepted Answer

TIPS (Treasury Inflation-Protected Securities)

Answer

Municipal bonds

Answer

Zero-coupon bonds

Answer

Convertible bonds