SIE Exam Lesson 10 Free Quiz: Credit Default Swaps, Adjustable Rate Securities and SPV’s

SIE Exam: Securities Industry Essentials Exam Lessons and Information

This is a SIE Exam Lesson 10 Free Quiz which is covering Credit Default Swaps, Adjustable Rate Securities and SPV'. Try it and see how you do if you need help listen to the lesson over. SIE SIE Exam Lesson 10 Free Quiz This is a SIE Exam Lesson 10 Free Quiz which is coveringCredit Default Swaps, Adjustable Rate Securities and SPV's. Try it and see how you do if you need help listen to the lesson over. Questions covered include Below are questions based on the previous lesson. Choose the letter of the correct answer. To take the quiz online, click here. 1. Which of the following are derivative type products? (Select all that apply.) A. auction rate securities B. credit default swaps C. exchange-traded notes D. market index-linked CDs 2. The reason you would buy a credit default swap if you are a speculator is you expect the credit worthiness of a company to ___. A. go up B. go down C. be constant D. be the same as the leading index on the market 3. Credit default swaps are traded ___. A. on floors B. on the primary market C. on the secondary market D. over-the-counter 4. There is no limit to the number of credit default swaps that can be written on any specific position. A. True B. False 5. It is a credit default swap used as a hedge vehicle for a position. A. covered CDS B. indexed CDS C. married CDS D. naked CDS 6. It is a credit default swap for bonds that you speculate on but do not own. A. covered CDS B. indexed CDS C. married CDS D. naked CDS 7. How much would you pay for a credit default swap of a $50,000 worth of bonds that has a spread of 25 basis points? A. $125 B. $200 C. $2,000 D. $12,500 8. In a Dutch auction, a person actually puts back the bond to the issuer. A. True B. False 9. It is the lowest rate where there are enough purchasers willing to buy all the auctionable securities at a Dutch auction. A. auction rate B. clearing rate C. interest rate D. market rate 10. In a Dutch auction, the clearing rate is reset ___. A. every 7 days B. every 28 days C. every 35 days D. based on whatever is set in the offering circular or official statement SIE Exam Lesson 10 Free Quiz: Continued 11. In a Dutch auction, bids higher than the clearing rate will be able to buy the bonds. A. True B. False 12. Which of the following happens in the case of a failed auction? (Select all that apply.) A. There are so many people putting back their bonds but so few people buying them. B. There is no enough interest that develops in the market. C. People could not get out of their positions. D. People hold on to their auction rate securities at the minimum yield that was put in the bond covenant. 13. Which of the following are the risks in auction rate securities? (Select all that apply.) A. counterparty risk B. credit risk C. marketability risk D. suitability risk 14. Which of the following is true in a market index-linked CD? (Select all that apply.) A. These are CDs with a yield equivalent to a portion of an index. B. If the market goes up, you will participate equally on how much the upside of the market is. C. If the market goes down, you are guaranteed that your principal will not fall below par. D. If the bank issuing the CD goes bankrupt and the CD is not federally insured, you will not get back your principal. 15. If you don’t hold on to a market index-linked CD until maturity, you’re entitled to participate in its upside as long as the CD is FDIC insured. A. True B. False 16. Which of the following are risks in a market index-linked CD? (Select all that apply.) A. counterparty risk B. credit risk C. market risk D. principal risk 17. In a market index-linked CD, you can only lose principal if the institution issuing the CD goes bankrupt. A. True B. False 18. Which of the following are risks in an exchange-traded note? (Select all that apply.) A. counterparty risk B.