Capital Market Debt Securities and Financial Instruments Quiz

Debt can only be categorized as short term and long term within the money market definition.

Debt market is where equity instruments are transacted.

Debt instruments are not legally enforceable evidence of financial debt.

Debt instruments increase liquidity and decrease transferability.

Short term debt instruments are expected to be repaid within less than one year.

Credit card bills can be an example of short term debt instruments in personal finance perspective.

Short-term debt typically comes in the form of revolving lines of credit and treasury bonds.

Long-term debt instruments are obligations due in less than one year.

Personal finance perspective often involves car loans and mortgage payments.

Debt securities include government bonds, corporate bonds, and preferred stock.

Money market debt securities have maturities greater than one year.

Interest rates on debt securities are not affected by the perceived repayment ability of the borrower.

Debt securities have maturities shorter than one year.

All financial instruments are considered securities.

A debt security represents ownership position in a non-traded private company.

Debt securities can only be exchanged for other securities, not cash.

Government bonds are considered both debt instruments and debt securities.

The debt market is also known as the bond market.

Senior tranches in a CDO have higher credit ratings than junior tranches.

Junior tranches in a CDO offer lower coupon rates compared to senior tranches.

Corporate bonds are issued by national governments to raise money.

Bonds always provide a steady income stream to investors in the form of coupon payments.

At maturity, the bond issuer repays the bondholder more than the face value of the bond.

Government bonds provide periodic interest payments to the buyers.

The coupon rate of a bond is the fixed return that an investor earns at maturity.

Municipal bonds are issued by corporations to fund their projects.

Mortgage bonds are collateralized by a pool of assets like loans and credit card debt.

Investors may purchase a bond at par, above par, or below par based on interest rate levels.

Asset-backed bonds are also known as Corporate Debt Obligations.

The primary goal of the bond market is to provide short-term financial aid for public projects.