30 Questions
What is the primary purpose of Federal Land Banks?
To provide long-term credit to farmers and ranchers
Which type of bonds is designed to provide financial support to Small and Medium Enterprises (SMEs)?
SME Finance Bonds
What is the main difference between municipal bonds and national bonds?
Municipal bonds have lower liquidity than national bonds
Which institution issues Currency Stabilization Bonds?
Bank of Korea
What is the primary purpose of Industrial Finance Bonds?
To support industrial growth and development projects
Which type of bonds is issued by local government entities to finance specific public projects?
Municipal Bonds
What is the primary reason for the U.S. Treasury issuing notes and bonds?
To finance its operations
Why are Treasury bonds often considered to have a risk-free rate?
Because the U.S. Treasury can print money to pay off the debt
What is the main advantage of Treasury Inflation-Protected Securities (TIPS)?
They eliminate inflation risk from holders of Treasury securities
What is the effect of inflation on Treasury bonds?
It lowers the real value of the money received from the bonds
When were Treasury Inflation-Protected Securities (TIPS) introduced?
1997
What is a key benefit of the bond market mechanism?
Offering a mechanism for price discovery
What is the relationship between the interest rate on Treasury bonds and the inflation rate, as shown in Figure 2?
The interest rate on Treasury bonds fluctuates with the inflation rate
What is the priority order for secured creditors in asset distribution?
The first claim, due to collateral
What is the main challenge in recovering investments in a bankrupt company?
Limited assets available for liquidation
Which type of bondholders face the highest interest risk?
Subordinated debt holders
What is the main difference between subordinated debt holders and unsecured bondholders?
Priority order in asset distribution
Why do bonds, despite being generally safer investments, still carry significant risks?
In the case of bankruptcy, with limited assets for distribution
What type of bond gives the issuer the right to redeem the bond before maturity at a predetermined price?
Callable bonds
What feature of Floating Rate Notes provides protection against rate fluctuations?
Variable interest rate
What type of bond combines elements of both debt and equity?
Hybrid Securities
What type of bond allows the bondholder to sell the bond back to the issuer at specified times prior to maturity?
Puttable bonds
Which type of bond has a variable interest rate that is adjusted periodically based on a benchmark interest rate or index?
Floating Rate Notes
What is a characteristic of Hybrid Securities that is similar to bonds?
Fixed interest payments
What was the main reason behind Nike's rapid growth?
Outsourcing production to low-cost regions
What was the impact of the 1996 Life magazine story on Nike's reputation?
It damaged the company's reputation and led to protests
What is the primary goal of sustainable finance in the global bond market?
To align with the Sustainable Development Goals (SDGs)
What has been the trend in ESG-linked bond issuance in recent years?
A steady increase in issuance
What is the primary motivation behind Nike's efforts to ensure transparency and proper working conditions in its supply chain?
To improve its public reputation
What is the definition of ESG-linked bonds?
Bonds that align with the Sustainable Development Goals (SDGs) to fund sustainable projects
Test your understanding of the fundamental characteristics of bonds, including bondholder rights and the legal process of asset distribution in the event of bankruptcy. Learn about the priority order of secured creditors and unsecured bondholders.
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