24
TEST BANK
CAPITAL MARKETS: INSTITUTIONS AND INSTRUMENTS
FABOZZI/MODIGLIANI
Chapter 29
INTERNATIONAL BOND MARKETS
MULTIPLE CHOICE
1. In the United Kingdom, a pound-denominated bond issued by a Japanese corporation and
subsequently traded in the United Kingdom’s bond market:
[M]
2. The global bond market can be classified into the national bond market and:
[E]
3. Australia is classified within the:
[E]
4. All of the following regarding Euro straights are true EXCEPT:
5. An issue that has both a minimum and a maximum coupon rate is said to be:
[M]
6. The coupon rate on a floating-rate note may be:
[M]
7. A dual-currency issue:
[E]
8. Which type of bond allows the warrant owner to buy additional bonds from the issuer at
[M]
9. If the yield to maturity on a Eurodollar bond is 5% then the bond-equivalent yield is:
10. When making a direct comparison between the yield to maturity on a U.S. fixed-rate
bond and a Eurodollar fixed rate bond:
[M]
11. By mid 2007, the European government bond market:
[M]
12. In a tap system:
[M]
13. From the issuing government’s perspective:
[M]
14. Outside of the U.S. inflation-indexed bonds are known as:
15. With regard to the rating of sovereign bonds, political risk:
[M]
16. Governments of emerging markets issue:
[E]
17. All of the following are true regarding covered bonds EXCEPT:
[M]
18. The decline in the share of Brady bonds is due to:
[M]
19. Because they are created using the securitization process, covered bonds are often
compared to:
20. The Pfandbriefe market:
[M]
TRUE/FALSE
1. There is no uniform system for classifying the sectors of the global bond market.
[E]
2. Dollar-denominated bonds issued by Spanish entities are nicknamed “matador bonds.”
[M]
3. The general objective of the Inter-American Development Bank is to improve the
efficiency of the international financial trading markets.
[M]
4. A drop-lock bond is one that automatically changes the floating coupon rate into a fixed
coupon rate under certain circumstances.
[M]
5. LIBID is the arithmetic average of LIBOR and LIMEAN.
[M]
6. While U.S. government debt is not rated by any nationally recognized statistical rating
organization, the debt of other national governments is rated.
7. In general, the securities issued by governments of emerging market countries are
denominated in U.S. dollars.
[M]
8. Past-due interest bonds are less frequently traded than principal bonds, and therefore have
lesser liquidity.
[M]
9. Brady bonds are growing in importance in the emerging bond market.
[E]
10. For covered bonds, the composition of the cover pool may change over time.
[E]
ESSAY QUESTIONS
1. Describe the methods of distribution of new government securities.
Key Issues:
2. Explain sovereign debt ratings assigned by ratings agencies.
Key Issues:
3. Discuss the differences between covered bonds and residential mortgage-backed
securities (RMBS), commercial mortgage-backed securities (CMBS), and other asset-
backed securities (ABS).
Key Issues: