CFR — Certificate in Fixed-Income Investing Bond Practice Questions

What does a bond's yield to maturity indicate?

• AA. Total return if held to maturity
• BB. Price of the bond
• CC. Annual interest payments
• DD. Tax implications

Which type of bond typically has the lowest yield?

• AA. Zero-coupon bonds
• BB. Treasury bonds
• CC. Corporate bonds
• DD. Municipal bonds

In a rising interest rate environment, which bond is likely to lose the most value?

• AA. Long-term bonds
• BB. Convertible bonds
• CC. Callable bonds
• DD. Short-term bonds

Which term describes the risk of a bond issuer defaulting?

• AA. Reinvestment risk
• BB. Interest rate risk
• CC. Default risk
• DD. Currency risk

Which factor could lead to a bond's downgrade?

• AA. Increased liquidity
• BB. Improved economic outlook
• CC. Decreased revenue
• DD. Higher credit ratings