Skills questionnaire Bonds 1. What do we mean by bonds? A share of the capital of a listed company. A securitized derivative financial instrument. A debt security issued by an issuer to finance its operations. 2. What is the coupon of a bond? The maturity of a bond. The periodic interest that the issuer pays to its bondholders. A fixed rate that determines the amount to be paid on each payment date. 3. Why are senior bonds considered safer? In the event of the issuer's insolvency, the repayment of the senior bonds comes from the liquidation of the issuer's assets. The issuing institution is too large to file for bankruptcy and not repay the bondholders (too big to fail). Senior bonds are not aligned with market trends. 4. What do we mean by subordinated bonds? Bonds whose interest payments and repayment of principal, in the event of liquidation or bankruptcy of the issuer, takes place after the repayment of the senior bonds. Bonds that always give a lower return than senior bonds. Bonds that involve less risk than senior bonds. 5. What is the main risk of bonds? The risk that the issuer is insolvent and will not be able to partially or totally repay the bonds. The risk that the increase in interest rates will cause the value of the bond to drop. The risk that rating agencies downgrade the issuer's specific rating. 6. What does the rating of the bonds indicate? The amount of bonds issued by a single issuer. The assessment on the issuer's ability to meet its obligations. The security level of the bond market. By continuing, you consent to the processing of data as indicated by privacy policy of the web-site.
