PMS EXAM

CHAPTER – 4
1. What are the different types of Fixed Income Securities?
Since bonds create fixed financial obligations on the issuers, they are
referred as fixed income securities. The types are:
 Government securities
 Public sector bonds
 Private sector bonds

2. i) Government securities or G-Secs, constitute the largest segment of the

Indian fixed income market.
ii) The Indian primary market in corporate debt is basically a private
placement market with most of the corporate bond issues being
privately placed among the wholesale investors i.e. the banks, financial
institutions, mutual funds, large corporate & other large investors.

3. What is the various issuer under Government securities?

a) Central Government and State Governments
b) Government Agencies / Statutory Bodies
c) Public Sector Undertakings
d) All of the above

4. What is the various issuer under public sector bank?

a) Central Government and State Governments
b) Government Agencies / Statutory Bodies
c) Public Sector Undertakings
d) Both b and c

5. What is the various issuer under Private sector bank?

a) Government Agencies / Statutory Bodies
b) Public Sector Undertakings
c) Corporates and Banks
d) Financial Institutions
e) Both c and d
 6. The issuer of a bond agrees to- 1) pay a fixed amount of interest (known
as______) periodically and 2) repay the fixed amount of principal (known
as ________) at the date of maturity. Fill in the blanks?
a) Face value, coupon
b) Coupon, face value
c) Coupon, interest rate

7. The coupon, maturity period and principal value are important intrinsic
features of a bond.

8. i) The term to maturity is the time period before a bond matures (or
expires).
ii) All G-Secs are normally coupon (interest rate) bearing and have semi-
annual coupon or interest payment with a tenor of between 5 to 30 years.
iii) Maturity period is also known as tenor or tenure.
iv) Principal value of the bond is different from bond’s market price,
except when the coupon rate of the bond and the prevailing market rate of
interest is exactly the same.
v) . If the market interest rate is above the coupon rate, the bond will sell
at a discount to the par value. If the market rate is below the bond’s coupon,
the bond will sell at a premium to the par value.

9. i) Bonds can also be issued with embedded options. Some common types
of bonds with embedded options are: bonds with call option, bonds with
put option and convertible bonds.
ii) A callable bond gives the issuer right to redeem all or part of the
outstanding bonds before the specified maturity date. The details about
the call provision would be mentioned in the contract.
iii) A putable bond gives the bondholders right to sell the bond back to
the issuer at a pre- determined price on specified dates.
iv) A convertible bond gives the bondholder the right to exchange the
bond for a specified number of common shares of the issuing company.
10.Which is the correct statement regR