You are on page 1of 2

ASSIGNMENT FOR INTERNAL ASSESMENT

Fixed Income securities


Q 1. If the discount rate that is used to calculate the present value of the debt obligation’s
cash flow is increased, what happens to the price of that debt obligation?

Q2. The pension fund obligation of the corporation is calculated as the present value of the
actuarially projected benefits that will have to be paid to beneficiaries. Why is the interest
rate used to discount the projected benefits important?

Q3. Why explain why you agree or disagree with the following statements, “ The price of a
floater will trade at its par value”.

Q4. What is the yield to maturity of a bond?

Q5. How is the internal rate of return of a portfolio ?

Q6, What is the total return for a 20 year zero coupon bond that is offering a yield to
maturity of 8 %.

Q7. Explain why the total return from holding a bond to maturity will be between the yield
to maturity and the reinvestment rate?

Q8. For a long term high yield coupon bond, do you think that the total return from holding
a bond to maturity will be closure to the yield to maturity or the reinvestment rate.

Q9. State why you would agree or disagree with the following statements, “ As the duration
of a coupon bond is equal to its maturity, the responsiveness of a zero coupon bond to yield
changes is the same regardless of the level of interest rates.

Q10. What are the limitations of using duration as measure of a bond’s price sensitivity to
interest Rate changes ?

Q11. Explain the why the duration of an inverse floater is a multiple of the duration of the
collateral from which the inverse floater is created?

Q12. What are the different type of bond risk, explain ?

Q13. Discuss the various method of bond pricing & bond valuation ?

Q14. What is YTM , explain ?

Q15. What is Bond return , explain in details ?


Q16. Discuss the ‘Bond Pricing Theorem “ ?What are its basic principle ?

Q17, Q. A bond of face value of Rs 100 with 10 percent coupon rate has been issued three
years ago and is redeemable after five years from now at a premium of 10 percent. The
interest rate prevailing in the market currently is 14 percent. Find the Duration of the
bond?

18. Q. A DDB is issued for the maturity period of 10 years with the face value Rs 20,000.
Find the value of the bond at the required rate of return 15 % ?

Q19. Q. A bond of face value Rs.1000 was issued five years ago at a coupon rate of 8
percent. The bond had a maturity period of 12 years and as of today; therefore, five more
years are remaining for final repayment at par. If the current market interest rate is 14
percent, Find the present value of the bond ?

You might also like