Test Your NISM Series 22: Fixed Income Securities Mock Test Knowledge in 5 Minutes

1. What kind of unsecured debt, which never expires, do banks issue to strengthen their capital base according to Basel-III standards?

A. Interest rate floor B. Interest rate cap C. Perpetual bonds D. Inverse floater

2. What is the financial term for a contract that sets both a maximum and a minimum limit on interest rate movements?

A. Swap B. Collar C. Floorlet D. Caplet

3. Which specific interest rates are used by the central bank to define the daily boundaries for call money market rates?

A. MSF rate B. Reverse repo rate C. Both A and B D. Bank rate

4. Is it true that Market Segmentation Theory claims bond yields for different time periods always move in the same direction?

A. TRUE B. FALSE

5. In an auction based on interest rates (yields), how are the competing bids generally organized?

A. Bids are listed from lowest yield to highest B. Bids lower than the set cut-off yield are turned away C. Bids are listed from highest yield to lowest D. Both B and C

6. What is the main objective of issuing "Green Bonds"?

A. To fund the clearing of forests B. To pay for fire safety awareness programs C. To raise capital for environmental and climate-friendly projects D. To fund social welfare projects under government CSR rules

7. Under what market condition is a company most likely to "call" (repay early) its callable bonds?

A. When market interest rates are rising B. When market interest rates fall below the bond's fixed rate C. When the bond is trading at its original face value D. When the bond is trading at a discount

8. A bond that includes a special feature allowing it to be repaid early by the issuer or the investor is known as:

A. A callable bond only B. A puttable bond only C. A bond with an embedded option D. A puttable bond issued by the company

9. What type of contract allows an investor to protect themselves against a bond issuer failing to make payments?

A. Interest rate derivatives B. Credit derivatives C. Equity derivatives D. Currency derivatives

10. Through which methods can a corporation issue its bonds to the public or investors?

A. Private placement B. Public issue C. Promoter issue D. Both A and B