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Free CFA Fixed Income Practice Questions & Answers

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Question 181

If the credit curve for a company is upward sloping, this most likely implies:

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Question 182

A five-year corporate bond has a yield of (5.5%). The five-year government bond yield is (2.5%). What is the bond’s credit spread?

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Question 183

In a credit default swap (CDS), the protection buyer:

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Question 184

A credit event in a CDS contract typically includes:

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Question 185

In a CDS index with 100 equally weighted names and a notional of 100 million, a default of one name typically results in:

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Question 186

Which statement best describes the CDS spread?

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Question 187

Assume a simple one-period CDS model with no discounting. The probability of default over the period is (3%), and the loss given default is (60%). What is the fair CDS spread for that period (as a percentage of notional)?

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Question 188

In cash settlement of a CDS, the recovery rate used for payout is typically:

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Question 189

Which of the following is most characteristic of a mortgage-backed security (MBS)?

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Question 190

Which of the following factors is most likely to cause widening credit spreads?

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Question 191

A sinking fund provision most likely:

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Question 192

A credit default swap (CDS) is best described as a contract in which:

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Question 193

A sequential‑pay CMO differs from a pass‑through MBS because:

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Question 194

In a PAC tranche, the primary protection mechanism is:

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Question 195

Which of the following is a reduced‑form credit model assumption?

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Question 196

A structural credit model assumes default occurs when:

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Question 197

A credit migration matrix is used to estimate:

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Question 198

The credit triangle expresses credit spread as approximately:

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Question 199

A downward‑sloping credit curve most likely indicates:

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Question 200

A CDS basis is defined as:

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Question 201

A positive CDS basis suggests:

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Question 202

In a CDS, the protection seller:

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Question 203

The hazard rate is best described as:

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Question 204

A credit spread curve that steepens most likely indicates:

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Question 205

A credit default swap premium is most closely related to:

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Question 206

In a CDS, physical settlement means:

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Question 207

A CDS index differs from a single‑name CDS because:

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Question 208

A PAC tranche is most stable when:

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Question 209

A support tranche in a CMO:

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Question 210

A planned amortization class (PAC) has:

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Free CFA Fixed Income Practice Questions & Answers

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