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Practice Quiz M4.5

This document contains a practice quiz for a financial markets module. The quiz has 5 multiple choice questions that test understanding of key concepts related to fixed income markets and bond pricing, including: - Inflation is a factor that causes fixed future payments to be risky and interest rate risk faced by bond issuers. - Both the bond market where businesses raise capital and the risk of being too highly leveraged with debt are correctly stated. - Interest rate risk is the risk that bond prices can change. - Changing prices in primary bond trades and corporate bond default premiums are correctly addressed. - The cost of debt could include the yield-to-maturity on bonds issued.

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Iraguha Longin
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502 views4 pages

Practice Quiz M4.5

This document contains a practice quiz for a financial markets module. The quiz has 5 multiple choice questions that test understanding of key concepts related to fixed income markets and bond pricing, including: - Inflation is a factor that causes fixed future payments to be risky and interest rate risk faced by bond issuers. - Both the bond market where businesses raise capital and the risk of being too highly leveraged with debt are correctly stated. - Interest rate risk is the risk that bond prices can change. - Changing prices in primary bond trades and corporate bond default premiums are correctly addressed. - The cost of debt could include the yield-to-maturity on bonds issued.

Uploaded by

Iraguha Longin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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2/12/2020 Practice Quiz M4 (Ungraded)

My courses ▶ (20/01) MScFE 560 Financial Markets (C20-S1)


▶ Module 4: Fixed Income and Bond Markets ▶ Practice Quiz M4 (Ungraded)

Started on Wednesday, 12 February 2020, 2:48 PM


State Finished
Completed on Wednesday, 12 February 2020, 2:59 PM
Time taken 10 mins 37 secs

Question 1

Complete

Not graded

Consider the following statements:

Statement A: In ation is a factor that causes xed future payments to be


risky.
Statement B: Interest-rate risk is faced by a bond issuer as its bond prices
may change at any time.

Which of the statements given above is correct?

Select one:
Only statement B
Both statement A and B

Only statement A
Neither statement A nor B

Your answer is correct.

https://masters.wqu.org/mod/quiz/review.php?attempt=173764&cmid=33541 1/4
2/12/2020 Practice Quiz M4 (Ungraded)

Question 2

Complete

Not graded

Consider the following statements:

Statement A: The bond markets, where businesses raise capital, can also be
called the capital markets.
Statement B: It is risky for a business to be funded by less equity than debt.

Which of the statements given above is correct?

Select one:
Only statement B
Only statement A

Neither statement A nor B


Both statement A and B

Your answer is correct.

Question 3

Complete
Not graded

Consider the following statements:

Statement A: Interest-rate risk is the risk that bond’s prices can change.
Statement B: The term of a bond (the time remaining until its maturity) can
never, by de nition, be less than a year.

Which of the statements given above is correct?

Select one:
Neither statement A nor B
Only statement B

Both statement A and B


Only statement A

Your answer is correct.

https://masters.wqu.org/mod/quiz/review.php?attempt=173764&cmid=33541 2/4
2/12/2020 Practice Quiz M4 (Ungraded)

Question 4

Complete

Not graded

Consider the following statements:

Statement A: Changing prices in primary bond trades gives rise to interest


rate risk.
Statement B: A difference between a government bond price and a
corporate bond price is created when the corporate entity defaults.

Which of the statements given above is correct?

Select one:
Neither statement A nor B
Both statement A and B

Only statement B
Only statement A

Your answer is correct.

Question 5

Complete
Not graded

The cost of debt could be which of the following?

Select one:
The required return on money borrowed as a long-term loan from a bank
The required return on money borrowed from a venture capitalist
The yield-to-maturity on money raised by selling bonds

All of the choices above could be considered the cost of debt

Your answer is correct.

◄ Notes 4 M4
Jump to...

Live Session M4 ►

https://masters.wqu.org/mod/quiz/review.php?attempt=173764&cmid=33541 3/4
2/12/2020 Practice Quiz M4 (Ungraded)

https://masters.wqu.org/mod/quiz/review.php?attempt=173764&cmid=33541 4/4

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