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Q89 Ans B:
In case of floating rate securities, the longer the reset date the higher the interest rate risk.
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Today's Question (Questions and answers provided by Knowledge Varsity)
Q90. Mohammed Mohsin, fund manager of Shekh Obdulla Investments, made the following statements regarding fixed income investment in a recent investors’ conference:
Statement 1: As yields fall, the price of callable bonds will rise lesser than similar option-free bonds due to the decrease in value of the embedded call option.
Statement 2: As yields rise, the price of putable bonds will fall lesser than similar option-free bonds due to an increase in value of the embedded put option.
A. Both statements are correct
B. Statement 1 is correct, Statement 2 is incorrect
C. Statement 1 is incorrect, Statement 2 is correct
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Q90 Ans C :
Statement 1 has the first part correct that is the price rise will be lesser but it is not because the option price decreases but it is because the option price increases.
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Today's Question (Questions and answers provided by Knowledge Varsity)
Q 91. George Venky, a fund manager with Ixia Investments makes the following statement
Statement 1: Pre-refunded bonds have low default risk
Statement 2: A Muni may be insured by a third party, in which case it is called an Insured Bond.
Please select the correct option with respect to the statements mentioned by George
A. Both statements are Incorrect
B Both statements are Correct
C Statement 1 is Incorrect, Statement 2 is Correct
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Q 91 Ans B:
The statements specify the credit enhancement ways. In Prefunded bonds some treasury securities are bought which are used to pay the coupon and the par value, since treasury is risk free, prefunded bonds have lesser risk.
A municipal bond can be insured by third party to make it attractive to the investors.
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Dear DG Members,
We have posted the last question on May 10, 2011 (as promised earlier). Thank you for your support and we are grateful to our content partner - Knowledge Varsity.
We hope that all of you will pass the Level 1 CFA exam. All the best!
Regards,
Team DG
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All the best for the CFA exam on June 5th, 2011!
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CFA L1 June 2011
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@ optimisticAL
will tell more in two month time, No comment for now
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Thanks a lot for confirming the same.
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Important information for CFA Candidates:
June 2011 Level I and Level II CFA exam results will be emailed on Tuesday, 26 July 2011, no earlier than 9:00 am ET. June 2011 Level III CFA exam results will be emailed Tuesday, 16 August 2011, no earlier than 9:00 a.m. ET.
