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, 2:14 PM

State Finished
Completed on Wednesday, 12 February 2020, 2:25 PM
Time taken 10 mins 15 secs

Question 1

Complete

Not graded

Consider the following statements:

Statement A: If there are no perceived changes to an entity’s default risk, its

bond prices can still change suddenly.
Statement B: Tax is a factor that causes xed future payments to be risky.

Which of the statements given above is correct?

Select one:
Only statement A
Only statement B

Neither statement A nor B

Both statement A and B

Your answer is correct.

https://masters.wqu.org/mod/quiz/review.php?attempt=173757&cmid=33541 1/4
2/12/2020 Practice Quiz M4 (Ungraded)

Question 2

Complete

Not graded

Consider the following statements:

Statement A: A bond’s maturity date is, by de nition, more than a year away
from its issuing date.
Statement B: Interest-rate risk is the risk that a bond’s principal changes.

Which of the statements given above is correct?

Select one:
Both statement A and B
Only statement B

Only statement A
Neither statement A nor B

Your answer is correct.

Question 3

Complete
Not graded

How will one-year zero-coupon bond prices change if both the one-year and four-
year interest rates increase by 1%?

Select one:
One-year zero-coupon bond prices will decrease by more than four-year
zero-coupon bond prices.
One-year zero-coupon bond prices will decrease by less than four-year zero-
coupon bond prices.

It depends on whether there are other changes to the yield curve.

One-year zero-coupon bond prices will decrease by the same amount as
four-year zero-coupon bond prices.

Your answer is correct.

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2/12/2020 Practice Quiz M4 (Ungraded)

Question 4

Complete

Not graded

Consider the following statements:

Statement A: If the default risk of an entity is perceived to change, all

defaultable bond prices in the market will change.
Statement B: The difference between a government bond price and a
corporate bond price is likely due to default risk.

Which of the statements given above is correct?

Select one:
Only statement A
Only statement B

Neither statement A nor B

Both statement A and B

Your answer is correct.

Question 5
Complete

Not graded

What is an alternative name for bond markets, and how does it relate to its
de nition and characteristics?

Select one:
Bond markets are also called the xed-income markets, because the traded
instruments have speci ed promised payments.
Bond markets are also called the capital markets, because investors can
invest by lending their capital.
Bond markets are also called the capital markets, because they are where
business raise capital for their business.

Bond markets are also called the xed-income markets, because bonds are
low risk investments that essentially x the amount of pro t earned each
period.

Your answer is correct.

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2/12/2020 Practice Quiz M4 (Ungraded)

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