FINRA FINRA Municipal Securities and Fixed Income 2

Question 1

What is 'yield to maturity' (YTM) on a bond?

Accepted Answer

The total return if held until maturity, accounting for price and all coupon payments

Answer

YTM represents the total annualized return an investor earns if the bond is held to maturity, factoring in the purchase price, coupon payments, and face value repayment.

Question 2

A municipal bond trading at a price above its par value is said to be trading at a:

Accepted Answer

Premium

Answer

A bond trading above its face (par) value is trading at a premium, usually because its coupon rate exceeds current market interest rates.

Question 3

Which of the following best describes a 'callable' municipal bond?

Accepted Answer

The issuer has the right to redeem the bond before its maturity date

Answer

A callable bond gives the issuer the option to redeem the bond before its stated maturity date, typically when interest rates decline.

Question 4

What is the 'coupon rate' of a bond?

Accepted Answer

The annual interest rate paid on the bond's face value

Answer

The coupon rate is the fixed annual interest rate stated on the bond, calculated as a percentage of the bond's par value.

Question 5

Under MSRB rules, a registered municipal securities dealer must deliver an official statement to a customer by:

Accepted Answer

Settlement of the transaction

Answer

MSRB Rule G-32 requires dealers to deliver the official statement to customers no later than the settlement date of the transaction.

(FINRA) FINRA Exams Practice Test

(FINRA) FINRA Exams Practice Test

FINRA FINRA Municipal Securities and Fixed Income 2