Module 2: Fixed-Income Cash Flows and Types
1. Which of the following statements best describes the type of bonds to be
issued given the issuer’s country and where the bonds will be issued and
traded?
A. Since Digistrype is planning to issue and sell euro-denominated bonds, its
bonds would be considered Eurobonds.
B. Since Digistrype is planning to issue and sell euro-denominated bonds to
investors in Germany, its bonds would be considered foreign bonds.
C. Since Digistrype is planning to issue and sell bonds to domestic investors in
Germany, its bonds would be considered domestic bonds.
Answer:
Foreign bond là công ty A phát hành tại nước B bằng đồng tiền của nước B.
Eurobond là công ty A phát hành tại nước C bằng đồng tiền của nước B
2. Which of the following modifications could Digistrype incorporate to best
mitigate the investors’ credit concerns?
A. Digistrype could consider deferred debt coupons and/or principal
payments.
B. Digistrype could consider adding a call provision to its new debt.
C. Digistrype could consider accelerating principal repayment or linking debt
coupon changes to financial covenants.
5. Which of the following statements best describes the implications of
removing the conversion feature from the bond?
A. Removal of the conversion feature would likely result in a higher coupon.
B. Removal of the conversion feature would likely increase the bond price.
C. Removal of the conversion feature would likely reduce credit risk.
A is correct. Because the conversion provision is valuable to bondholders, the
convertible bond price is higher than the price of an otherwise similar bond
without the conversion provision. Similarly, the yield on a convertible bond is
lower than the yield on an otherwise similar non-convertible bond. Thus,
should the Digistrype team elect to remove the conversion feature, it would
likely have to increase the bond’s coupon rate in order to attract investors.
B is incorrect because removal of the conversion feature would decrease, not
increase, the bond price.
C is incorrect because removal of the conversion feature would not change the
credit risk.
6. Which of the following bonds is most likely to trade at a lower price relative
to an otherwise identical option-free bond?
A. Putable bond
B. Callable bond
C. Convertible bond
Giá trái phiếu không có quyền chọn (option-free) ± Giá trị của quyền
chọn (option)
in the view of investor:
Tuỳ loại quyền chọn là có lợi cho nhà đầu tư hay có lợi cho tổ chức phát hành,
giá trái phiếu sẽ cao hơn hoặc thấp hơn trái phiếu bình thường.
+ Putable bond: vì nđt có quyền bán lại => giá giao dịch cao hơn
+ call: vì nđt bị động => giá giao dịch phải thấp hơn để bù đắp risk
+ convert: lợi cho nđt => giá cao hơn
7. Ted Nguyen is an investor domiciled in a country with an original issue
discount tax provision. He purchases a zero-coupon bond at a deep discount
to par value with the intention of holding the bond until maturity. At maturity,
he will most likely face:
A. a capital loss.
B. a capital gain.
C. neither a capital loss nor gain.
investor will face neither a capital gain nor a loss as the original issue discount
tax provision allows the investor to increase the cost basis of the bond.
Quy định thuế về khoản chiết khấu phát hành ban đầu: Khi nhà đầu tư mua
trái phiếu phát hành dưới mệnh giá (chiết khấu), thì phần chênh lệch đó được
xem là lãi tích lũy và phải nộp thuế hằng năm, dù chưa thực nhận tiền cho
đến ngày đáo hạn.
