SIE Debt Securities and Fixed Income 2

Question 1

What does 'yield to maturity' (YTM) represent?

Accepted Answer

The total return if the bond is held until maturity

Answer

YTM represents the total annualized return an investor earns if the bond is held to maturity and all payments are reinvested.

Question 2

Which US Treasury security has a maturity of more than 10 years?

Accepted Answer

Treasury bond

Answer

Treasury bonds have maturities of 20 to 30 years, making them the longest-duration US government securities.

Question 3

A bond trading at a premium means its price is:

Accepted Answer

Above par value

Answer

A bond trades at a premium when its price exceeds par value, typically because its coupon rate is above current market rates.

Question 4

Municipal bonds are issued by:

Accepted Answer

State and local governments

Answer

Municipal bonds are issued by state, city, county, and other local government entities to fund public projects.

Question 5

What is a debenture?

Accepted Answer

An unsecured bond backed only by the issuer's creditworthiness

Answer

A debenture is an unsecured debt instrument backed only by the general creditworthiness and reputation of the issuer.

SIE - Securities Industry Essentials Practice Test