Wall Street Prep: Bonds Crash Course Questions And
Answers With Verified Solutions 100% Correct (Graded
A+) Latest Update 2024/2025.
What is the focus of the course? - ANSWER analysis of debt
Where does demand for bonds come from? - ANSWER Demand comes from governments,
corporations, and households.
What are Fixed income securities? - ANSWER Fixed income securities: financial instruments that
require the borrower to pay a predetermined amount to the holder of the security in exchange for
capital upfront.
Example of a fixed income security - ANSWER Example: a corporation needs to borrow
$5,000,000. Corporation will issue a fixed income security. Owners of securities, such as investors, now
have the right to receive predetermined amounts in exchange for giving that $5,000,000 upfront.
What are the 2 broad types of debt? - ANSWER Bonds and Loans
What do the government, households, and corporations use to borrow? - ANSWER -
Government borrows primarily with bonds
- Corporations use primarily both
- Households: borrow with loans, which sometimes may get turned into securitized bonds
Debt from non-financial corporations - ANSWER Non-financial corporations: The US is most
heavily weighted towards corporate bonds.
Debt from households - ANSWER Household debt: The US is most heavily weighted towards
securitization, while traditional bank loans dominate elsewhere.
What is securitization? - ANSWER the procedure where an issuer designs a marketable financial
instrument by merging or pooling various financial assets into one group.
Who dominates the debt market? - ANSWER The United States dominates the debt market
% of global Debt:
United States: 40%
Non-US Developed Countries: 46%
Emerging markets: 14%
Bullet bond - ANSWER - Bond in which the principal repayment is made entirely at maturity.
- Also known as conventional or vanilla bond
- common for corporate + long term government bonds
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