Exam QnA International Bond Market PDF

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International Bond Market 1) A "foreign bond" issue is A) one denominated in a particular currency but sold to investors in national capital markets other than the country that issued the denominating currency. B) one offered by a foreign borrower to investors in a national market and denominated in that nation's currency. C) for example, a German MNC issuing dollar-denominated bonds to U.S. investors. D) one offered by a foreign borrower to investors in a national market and denominated in that nation's currency (e.g., a German MNC issuing dollar-denominated bonds to U.S. investors). 2) A "Eurobond" issue is A) one denominated in a particular currency but sold to investors in national capital markets other than the country that issued the denominating currency. B) usually a bearer bond. C) for example, a Dutch borrower issuing dollar-denominated bonds to investors in the U.K., Switzerland, and the Netherlands. D) all of the options 3) "Yankee" bonds are A) dollar-denominated foreign bonds originally sold to U.S. investors. B) yen-denominated foreign bonds originally sold in Japan. C) pound sterling-denominated foreign bonds originally sold in the U.K. D) none of the options 4) Publicly traded Yankee bonds must A) meet the same regulations as U.S. domestic bonds. B) meet the same regulations as Eurobonds if sold to Europeans. C) meet the same regulations as Samurai bonds if sold to Japanese. D) none of the options 5) The Eurobond segment of the international bond market A) is roughly four times the size of the foreign bond segment. B) has considerably less regulatory hurdles than the foreign bond segment. C) typically has a lower rate of interest that borrowers pay in comparison to Yankee bond financing. D) all of the options 6) Private placement bond issues A) do not have to meet the strict information disclosure requirements of publicly traded issues. B) have auditing requirements that do not adhere to publicly traded issues. C) meet the strict information disclosure requirements of publicly traded issues, but have larger minimum denominations. D) none of the options

7) One unintended consequence of Sarbanes-Oxley A) is that international companies are starting to prefer issuing Eurobonds in the private placement market in the U.S. to avoid costly information disclosure required of registered bonds. B) is that international companies are starting to prefer to issue Yankee bonds in the private placement market in the U.S. C) is that international companies are starting to prefer issuing Yankee bonds in the bearer bond market in the U.S. to avoid costly information disclosure required of registered bonds. D) is that international companies have left the bond market in the U.S. to avoid costly information disclosure required of registered bonds. 8) A "global bond" issue A) is a very large international bond offering by several borrowers pooled together. B) is a very large international bond offering by a single borrower that is simultaneously sold in several national bond markets. C) has higher yields for the purchasers. D) has a lower liquidity. 9) A global bond issue denominated in U.S. dollars and issued by U.S. corporations A) trade as Eurobonds overseas. B) trade as domestic bonds in the U.S. domestic market. C) trade as Eurobonds overseas and trade as domestic bonds in the U.S. domestic market. D) none of the options 10) The vast majority of new international bond offerings A) make annual coupon payments. B) have fixed coupon payments. C) have a fixed maturity. D) all of the options 11) Straight fixed-rate bond issues have A) a designated maturity date at which the principal of the bond issue is promised to be repaid. During the life of the bond, fixed coupon payments, which are a percentage of the face value, are paid as interest to the bondholders. B) a designated maturity date at which the principal of the bond issue is promised to be repaid. During the life of the bond, coupon payments, which are a percentage of the face value, are computed according to a fixed formula. C) a fixed payment, which amortizes the debt, like a house payment or car payment. D) none of the options 12) Six-month U.S. dollar LIBOR is currently 4.25 percent; your firm issued floating-rate notes indexed to six-month U.S. dollar LIBOR plus 50 basis points. What is the amount of the next semi-annual coupon payment per U.S. $1,000 of face value? 0.5(LIBOR+x) x 1000 = 0.5(0.0425+0.005) x 1000 A) $43.75 B) $47.50 C) $23.75 D) $46.875

13) Floating-rate notes (FRN) A) experience very volatile price changes between reset dates. B) are typically medium-term bonds with coupon payments indexed to some reference rate (e.g., LIBOR). C) appeal to investors with strong need to preserve the principal value of the investment should they need to liquidate prior to the maturity of the bonds. D) are typically medium-term bonds with coupon payments indexed to some reference rate (e.g., LIBOR), and appeal to investors with strong need to preserve the principal value of the investment should they need to liquidate prior to the maturity of the bonds. 14) Floating rate notes behave differently in response to interest rate risk than straight fixed-rate bonds. A) True since FRNs experience only mild price changes between reset dates, over which time the next period's coupon payment is fixed (assuming, of course, that the reference rate corresponds to the market rate applicable to the issuer). B) False since all bonds experience an inverse price change when the market rate of interest changes. C) all of the options D) none of the options 15) Bonds with equity warrants A) are really the same as convertible bonds if the stated price of exercising the warrant is the par value of the bond. B) can be viewed as straight debt with a call option (technically a warrant) attached. C) can only be exercised on coupon dates. D) typically are convertible as well. 16) Which of the following best reflects a country's ability to obtain funds from abroad necessary to meet its public- and private-sector obligations to nonresidents? A) Fiscal assessment B) External assessment C) Monetary assessment D) Institutional assessment 17) Underwriters for an international bond issue will commit their own capital to buy the issue from the borrower at a discount from the issue price. The discount, or underwriting spread, is typically A) in the 1 to 1.5 percent range. B) in the 2 to 2.5 percent range. C) in the 3 to 3.5 percent range. D) in the 4 to 4.5 percent range. 18) The role of an underwriter is to A) help negotiate terms with the borrower. B) ascertain market conditions. C) manage the issuance. D) all of the options

19) The secondary market for Eurobonds A) is an over-the-counter market. B) is an organized exchange. C) has never developed—there is only a primary market for Eurobonds. D) none of the options 20) Eurobond market makers and dealers are members of the ________, a self-regulatory body based in Zurich. A) International Currency Market Association (ICMA) B) International Bond Marketers Association (IBMA) C) International Bond Regulators Association (IBRA) D) International Capital Market Association (ICMA) 21) Market makers in the secondary bond market A) stand ready to buy or sell for their own account. B) quote bid and ask spreads. C) trade directly with one another, through a broker or with retail customers. D) all of the options 22) With regard to clearing procedures for bond transactions, when a transaction is conducted, electronic book entries are made that transfer book ownership of the bond certificates from the seller to the buyer and transfer funds from the purchaser's cash account to the seller's. However, A) physical transfer of the bonds seldom takes place. B) the physical transfer of the bonds takes place as much as 3 days later. C) the physical transfer of the bonds takes place as much as 6 weeks later. D) the physical transfer of bonds only occurs if the depository banks that physically store bond certificates are different for the buyer and seller. 23) Two major clearing systems for international bond transactions are A) Euroclear and Clearstream International. B) Euroclear and Clearasil. C) Deutsche Börse Clearing and Cedel International. D) none of the options...