Fixed Income - Fixed Income Section 1
- Option : B
- Explanation : Any bond that is aligned with an index or inflation is called index-linked bonds.
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22. Inflation-linked bonds are structured in a way that:
- Option : C
- Explanation : Inflation-linked bonds can be structured in a variety of ways; the inflation adjustment can be made via the coupon payments, the principal repayment, or both.
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23. Which of the following is least likely an issuer of bonds?
- Option : B
- Explanation : Pension funds are typically investors in, not issuers of, bonds. A and C are incorrect because major issuers of bonds include sovereign (national) governments, non-sovereign (local) governments, quasi-government agencies, supranational organizations, and financial and non-financial companies.
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- Option : C
- Explanation : Non-sovereign (local) government bond issuers include provinces, regions, states, and cities. Analyst 1 is incorrect because quasi-government bonds are issued by agencies that are either owned or sponsored by governments. Analyst 2 is incorrect because supranational bonds are issued by international organizations.
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- Option : B
- Explanation : Money market securities are issued with a maturity at issuance (original maturity) ranging from overnight to one year. A is incorrect because securitization does not relate to a bond’s maturity, but to the process that transforms private transactions between borrowers and lenders into securities traded in public markets. C is incorrect because capital market securities are issued with an original maturity longer than one year.
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