CFA Level I · CFA Level I Exam · Fixed-Income Cash Flows and Types
Compared with the money market, the capital market segment of fixed-income securities is best described as including instruments with:
The capital market segment is best described as including instruments with original maturities longer than one year. Money market securities mature in one year or less. Coupon structure, fixed or floating, does not determine the segment.
- AOriginal maturities of one year or less
- BOriginal maturities longer than one yearCorrect
- COnly floating-rate coupons indexed to a reference rate
Explanation
Money market securities have original maturities of one year or less, while capital market bonds have original maturities longer than one year. Coupon type does not define the segment, since capital market bonds can be fixed or floating.
Did you get it right without looking?
One question tells you little. A timed set on Fixed-Income Cash Flows and Types shows your real accuracy, how long you take and where you lose marks.
More Fixed-Income Cash Flows and Types questions
- A money market instrument has 120 days to maturity and is priced at 980 per 1,000 face value. Using a 365-day year, its bond equivalent yiel…
- A 10-year bond has a put option exercisable by the investor at par in year 5. Interest rates rise sharply after issue. The investor's most l…
- A corporate bond is callable at par after a two-year call protection period. The call protection period is best described as the period duri…
- A bond's legal documentation sets out the issuer's promises regarding repayment and the actions it must take or avoid during the bond's life…
- An investor holds a bond with a call option that belongs to the issuer. Compared with an otherwise identical non-callable bond, the callable…
- A bond indenture states that the issuer is a special purpose entity whose legal obligations to bondholders are separate from those of the sp…