QUESTION 1 \"True or False: If a UK firm sells a dollar- denominated bond in the

Question

QUESTION 1

"True or False: If a UK firm sells a dollar- denominated bond in the United States, the bond is considered a Eurodollar Bond:"

TRUE

FALSE

QUESTION 2

"True or False: If a Japanese firm sells a Yen- denominated bond in the United States, the bond is considered a EuroYen Bond:"

TRUE

FALSE

QUESTION 7

" When evaluating a private equity investment, the Discount for Lack of Liquidity refers to:"

A. Cost of the Control Premium

B. Replacement Cost

C. Ability or Right to Sell the Assets

D. Cost of Finding a Buyer for the Assets or the Bid-Ask Spread

QUESTION 16

"In an Asset Backed Securitization (ABS) Transaction, the period of time for which Principal repayments are reinvested rather than paid out to bond holders is called:"

A. Maturity Date

B. Revolving Period

C. Amortization Phase

D. Early Termination Event

5 points   

QUESTION 17

"Within an ABS’s Indenture, a Waterfall or Priority of Payments would, in considerable detail, describe the monthly or quarterly application of Principal Proceeds to be made by the Servicer to bondholders. If this Waterfall followed a Sequential Pay Structure:"

A. Principal Proceeds would be reinvested

B. Principal Proceeds would be paid to the most senior ABS Bond in the capital structure

C. Principal Proceeds would be shared Pro-Rata across the ABS Bonds in the capital structure

D. Principal Proceeds would be returned to the ABS Equity or Residual holder

5 points   

QUESTION 18

"An Auto ABS is backed by a pool of prime credit quality fixed rate auto loans. The ABS investors, however, demand that the issued notes carry a floating rate (i.e. LIBOR). Of the options below, the best way for the seller/servicer to hedge this risk is via a:"

A. Prepayment option

B. Convertible option

C. Interest rate swap

D. None of the above

TRUE

FALSE

Explanation / Answer

(1) TRUE

(2) FALSE

(7) The correct answer is option (A) Cost of the Control Premium

(16) The correct answer is option (B) Revolving Period.

(17) The correct answer is option (A) Principal Proceeds would be invested

(18) The correct answer is option (B) Interest rate swap

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