Ch.18: Interest Rate Instruments and Fixed Income Markets

If the clean price of a bond is Rs.101.50 and the accrued interest computed for the settlement date is Rs.0.9967, the dirty (settlement/invoice) price is:

Between the previous coupon date and the settlement date of a secondary market bond trade, which party is entitled to the interest accrual for that period?

A T-Bill maturing in 34 days is trading at Rs.99.6898 (face value Rs.100). Using BEY = [(Face Value − Price)/Price] × (365/Days to Maturity) × 100, the yield is closest to:

A 5-year annual-coupon bond (10% coupon, Rs.100 face value) is priced at a market yield of 8%. Using the discounted cash flow method, its value is closest to which of the following (from the workbook's worked example)?

For the identical bond in the previous example (10% coupon, 5-year, Rs.100 face value, 8% yield) but paying coupons semi-annually, the workbook shows the value comes out to approximately:

An Inverse Floater's coupon behaves in which way as its benchmark interest rate changes?

A Deep Discount Bond is characterized in the workbook by which minimum discount to face value?

The difference between the yield on a corporate bond and the yield on a comparable-maturity government bond is called:

State Development Loans (SDLs) in the Indian G-Sec market are issued by:

Per the workbook's (non-binding) maturity classification, bonds maturing in 5 to 12 years are generally referred to as:

In the event of a company's liquidation, which class of bondholders is paid first among senior debt, subordinated debt and equity holders?

Yield-to-maturity is expected to fall by 200 bps, from 5% to 3%, on a bond with Modified Duration 10.66 and annual Convexity 81.96. Using %ΔPrice = [−MD×Δy] + [100×Convexity×(Δy)²], the estimated percentage price gain is closest to:

Which of the following statements about Convexity is correct, per the workbook's listed relationships?

In India, corporate bonds are issued predominantly through which route, versus a smaller share through public offer?

A single private placement debt issue of Rs.20 crore or more must, per SEBI's rules, be made through which mandatory platform for better and transparent price discovery?

Every corporate bond trade in India, whether OTC or via exchanges, must be reported to the Exchange within what time limit of execution, per SEBI's rule?

On the common credit rating scale described in the workbook, which range of ratings is classified as 'Non-investment or Junk Grade'?

A bond with a 7.17% coupon is trading at a clean price of Rs.96.2290. Using Current Yield = (Coupon/Clean Price)×100, the current yield is closest to:

Which day count convention is described as being widely used in Swap valuation?

Which day count convention is described in the workbook as widely used for Indian Government Securities, treating all months as having a fixed 30 days and the year as 360 days?

Under the 30/360 (European) day count convention, if either the start date or end date falls on the 31st of a month, that day is treated as:

The Discount Yield formula, important for trading 91-day T-Bill futures, differs from BEY chiefly in that it uses:

All other factors held constant, how does an increase in a bond's coupon rate affect its Macaulay Duration?

For a zero-coupon bond (assuming no embedded options), Macaulay Duration is:

A debt security pays a nominal 6% p.a., compounded semi-annually. Using Effective Rate = (1 + r/n)^n − 1, the effective annual rate is closest to:

A bond pays a 4.20% annual coupon, but the coupon is actually paid every month. Using Effective Yield = (1+r/m)^m − 1, the effective yield is closest to:

A bond issuer is most likely to exercise a call option on a callable bond when:

Which of the following is listed as an advantage of debt financing compared to equity, from the issuing company's perspective?

What key feature distinguishes a tradable 'Note'/debt security from a plain 'Loan' between two parties, per the workbook's Mr. A/Mr. B example?

When fiscal deficit is high and the Government must borrow a large amount from the market, what typically happens to interest rates, per the workbook's macro factors?

Which of the following is listed as a micro (bond-specific) factor influencing interest rates, rather than a macro/economy-wide factor?

If a debenture is redeemed for an amount less than its face value, it is said to be redeemed at:

Macaulay Duration is best described as:

A bond's Macaulay Duration is 5.34 and its annual yield to maturity is 4.5%. Using Modified Duration = Macaulay Duration / (1 + YTM), for an annual-pay bond the Modified Duration is closest to:

Modified Duration is best used to approximate a bond's price change for interest rate movements that are:

Commercial Paper (CP) and Certificates of Deposit (CD) in India are issued in which minimum denomination and multiples thereof?

Call Money in the Indian money market refers to:

Treasury Bills (T-Bills) in India are issued for which standard tenors via RBI's weekly auctions?

Masala Bonds are best described as:

Under the Basel III framework, which category of bank capital do AT-1 (Additional Tier-1) bonds belong to?

A portfolio is 30% invested in a bond with 3-year duration and 70% invested in a bond with 5-year duration. The portfolio's duration is:

Per the four basic properties of price volatility for an option-free bond described in the workbook, when yields fall, the resulting price increase is generally:

Non-Competitive Bidding (NCB) in G-Sec auctions is specially provided for which category of participants, and how are they allotted securities?

In a Government securities auction, when all successful bidders pay at the same auction cut-off rate rather than their own individually bid price/yield, the auction is called:

A bond has a dirty price of Rs.105 and a Modified Duration of 6.0. Using PV01 = (Dirty Price × Modified Duration)/10,000, the PV01 is closest to:

Which regulator is primarily responsible for the corporate bond market in India, including public-issued debt disclosure requirements?

For a zero-coupon bond issued by a sovereign government in its home currency and held to maturity, which risks are effectively eliminated?

If the risk-free rate is 8.25% and the credit spread for an AA-rated borrower is 0.25%, the interest rate applicable to that AA-rated borrower is:

If the coupon of a bond increases, its Modified Duration will __________ (other things remaining constant).

If the long-term rate is 10% and the short-term rate is 8%, the shape of the term structure of rates is:

Credit spread is the price of ___________.

The concept of 'accrued interest' applies to which of the following?

The RBI Retail Direct Scheme allows individual retail investors to:

Which RBI platform, introduced in 2005, is an anonymous screen-based electronic order matching system for G-Sec secondary market trading?

Holding Period Return (HPR) for a coupon bond can only be precisely computed:

An upward-sloping yield curve, where long-term yields exceed short-term yields, reflecting investors' expectations of future economic growth and inflation risk, is called a:

An Inverted yield curve, where short-term yields exceed long-term yields, is most often associated with:

If both the short rate (SR) and long rate (LR) move in the same direction but by different magnitudes (e.g., SR rises 0.10% while LR rises 0.20%), this type of steepening/flattening shift is called:

When the spread between long-term and short-term rates widens (increases), the shift is called:

Yield to Maturity (YTM) is best described as: