10 challenging multiple-choice questions of type of Bonds
1. Which of the following bonds is most likely to be affected by currency risk?
a) Domestic Bonds
b) Eurobonds
c) Municipal Bonds
2. A Japanese company issues bonds in the U.S. market denominated in USD. What type of bond is this?
a) Samurai Bond
b) Yankee Bond
c) Bulldog Bond
3. Which of the following is NOT a feature of Sovereign Bonds?
a) Backed by the national government.
b) Considered low-risk investments.
c) Higher interest rates compared to corporate bonds.
4. What is the primary risk associated with Zero-Coupon Bonds?
a) Default risk.
b) Interest rate risk.
c) Currency risk.
5. Which of the following bonds is most suitable for an investor seeking tax-exempt income?
a) Corporate Bonds
b) Municipal Bonds
c) Sovereign Bonds
6. A company issues bonds that can be converted into its shares after 5 years. What type of bond is this?
a) Zero-Coupon Bond
b) Convertible Bond
c) Green Bond
7. Which of the following is a key advantage of Green Bonds for issuers?
a) Higher interest rates compared to regular bonds.
b) Access to socially responsible investors.
c) No need for credit enhancement.
8. What is the main difference between Foreign Bonds and Eurobonds?
a) Foreign Bonds are issued in the issuer’s home currency, while Eurobonds are issued in foreign currencies.
b) Foreign Bonds are subject to the regulations of the country where they are issued, while Eurobonds are not tied to a specific country.
c) Foreign Bonds are riskier than Eurobonds.
9. Which of the following is an example of a Sovereign Bond?
a) A bond issued by Apple to fund research and development.
b) A bond issued by the U.S. government to finance public spending.
c) A bond issued by the city of New York to build a subway line.
10. What is the primary purpose of credit enhancement in bond issuance?
a) To increase the interest rate paid to investors.
b) To reduce the risk for investors and improve the bond’s credit rating.
c) To allow the issuer to avoid regulatory requirements.
