This guide ends with an invitation to action! The following
questionnaire aims to help the reader to consolidate the
theoretical and practical notions just exposed, through an exercise
with playful and at the same time formative modalities.
Knowing and understanding the functioning of the bond market and
its application areas can be quite difficult.
The test is designed to return to some of the most important
steps of this guide, in order to strengthen the fundamental
concepts. Below you will find a series of multiple-choice
questions, which you will have to answer by indicating the correct
sentence. At the end you will be able to read the solution keys to
the questions.
1 - What is a bond?
a) An investment instrument of exclusively banking origin, which
obliges the investor towards the issuer.
b) An investment instrument issued by a public or private
entity, which gives the holder the right to obtain repayment of the
capital lent, together with payment of the coupon.
c) A derivative instrument which offers the right but not the
obligation to collect a claim on maturity, together with a coupon
payment.
d) An ETF fund unit that collects credit issues from public and
private entities to distribute coupons to investors.
2 - What is the typical time orientation of an investor who is
looking for security over time, i.e. without speculative
purposes?
a) Medium and long term.
b) Short term.
c) Very short term.
d) They are purchased with the idea of holding them in the
portfolio forever.
3 - Which of these can be considered a disadvantage of bond
investments that have not matured?
a) The annual coupon payment, rather than the capital
appreciation
b) The stability of the yield for fixed rate bonds.
c) The illiquidity of the secondary market.
d) The failure to launch a new product if the issuer is
represented by a private entity.
4 - Which of the following groups are existing bond types?
a) In the money, at the money, out of the money.
b) Fixed yield, indexed yield, zero coupon.
c) Etf, hedge or balanced.
d) Alpha, beta or gamma.
5 - What are warrant bonds characterized by?
a) The presence of an appendix that guarantees the right but not
the obligation to buy a certain number of shares at a fixed
price.
b) From the convertibility of bonds into shares.
c) From the quotation in the derivatives market.
d) From any of the preceding points.
6 - What are secuirized bonds?
a) They are securitized securities, characterized by the
transfer of credit to subscribers other than the original ones.
b) These are particularly secure bonds, because they are
guaranteed by a third party.
c) They are bonds thus defined because they are associated with
a derivative security called a warrant.
d) They are government bonds, characterised by the transfer of
the claim to the government if the owner does not legitimise its
possession within 10 years.
7 - Why is it important to buy securities characterized by
liquidity on the market?
a) For the higher yield;
b) For the longest duration;
c) For the highest rating at issuance;
d) To be able to sell them more easily in case of need.
8 - What are convertible bonds?
a) Short-term debt securities convertible into long-term
securities.
b) Debt securities convertible into equity securities;
c) debt securities convertible into ETF funds;
d) None of these.
9 - What are bond ETFs?
a) They are mutual funds specialised in replicating a benchmark
composed of bonds.
b) A set of indices representing the best international
bonds;
c) Mutual funds created with the aim of beating the performance
of bonds taken as benchmarks;
d) None of these;
10 - What are rating agencies?
a) Consortia of banks and financial institutions created to
reduce the cost of brokering bonds on international markets;
b) Rating agencies that operate by judging bonds through the
publication of ratings and specialist studies;
c) Technical analysis agencies able to send a series of
operational signals to their subscribers for the implementation of
speculative trading strategies on bonds;
d) A series of market monitoring agencies operating as market
makers, whose aim is to ensure the liquidity of the bond market in
all situations and contexts.