Question 1

The securities repurchased have the same stated interest rate as, and maturities similar to, the securities sold and are generally priced to result in substantially the same yield is known as:

AYield-maintenance agreements

BVariable-coupon a agreements

CFixed-coupon agreement

DNone of the above

Answer : C

Question 2

In a yield-maintenance agreement:

Athe securities repurchased may have a different stated interest rate from that of the securities sold and are generally priced to result in substantially the same yield.

Bthe securities repurchased may have the same stated interest rate from that of the securities sold and are generally priced to result in substantially the same yield.

Cthe securities repurchased may have a different stated interest rate from that of the securities sold and are generally priced to result in substantially the different yield.

Dthe securities repurchased may have a same stated interest rate from that of the securities sold and are generally priced to result in substantially the different yield.

Answer : B

Question 3

What limits the repurchase price to a stipulated percentage of the face amount of the certificate?

APrice-cap provision

BInvestment provision

CLimit provision

DPar cap provision

Answer : D

Question 4

In what, securities involve in repos are not delivered on the settlement date of the agreement and the contract may be extended upon mutual agreement of the buyer-lender and seller-borrower.

AFinancial servicing

BPrice-cap

CRollover

DPurchasing agreements

Answer : C

Question 5

Insurance entities usually write covered-call options because they consider the premium received for writing the options to be either:

Aan economic hedge between a decline in market price and security

Ba decrease in yield on the underlying risk security

CBoth A & B

DNeither A nor B