CPFO-Treasury Investing Exam Questions and Answers Latest Update 2024 ( Already Passed)
why do you want a master repurchase agreement? - Answers "Protects investor in bankruptcy. The lender and debtor agree to an ongoing schedule of loans and repayments, with agreed upon securities used as collate...
why do you want a master repurchase agreement? - Answers "Protects investor in bankruptcy. The
lender and debtor agree to an ongoing schedule of loans and repayments, with agreed upon securities
used as collateral. 1984, bankruptcy laws changed to provide investor claim on the collateral, gives them
full access to the collateral."
What are asset backed securities? - Answers Debt investments backed by a pledge of assets, such as
cars, mobile homes, credit card repayments or mortgages
What are banker's acceptance securities? - Answers Short term debt securities used to finance trade
transactions that mature in 270 days or less.
What are money market mutual funds? - Answers Short term investments regulated by SEC 2A-7
what are certificates of deposits? - Answers time deposits that may be negotiable or non-negotiable
what is commercial paper? - Answers unsecured promisory notes of corporations which mature in 270
days or less
what are mortgage-backed securities? - Answers debt instruments backed by a pledge of mortgage
assets
what is securitization? - Answers where you take asset (credit card repymts), bundle them together and
sell the rights as an investment. They create a trust that the investor buys into.
what is a CMO? - Answers Collateralized Mortgage Obligation. They are mortgage backed securities that
are bundled, the rights to which are sold as an investment.
what are zero-coupon securities? - Answers Like a t-bill, interest doesn't pay until maturity.
what is an odd lot? - Answers Sometimes investors want to purchase a specific $ amount of securities
leaving the bank with an odd lot ($100 or less) left over. Someone else bought the majority, but not all
of it.
what are derivatives? - Answers a financial instrument, the value of which depends on, or is derived
from, the value of one or more underlying assets or index or asset values
what is a put option? - Answers gives the owner the right, but not the obligation to SELL an asset at a
specified price (strike) by a predetermined date to a given party.
what is a call option? - Answers an agreement that gives the investor the right, but not the obligation, to
BUY a stock at a specified price within a specified time period.
in what type of interest environment might an investor exercise their put option? - Answers an investor
might exercise his put option (right to SELL) when interest rates have risen above
, Which of the following securities always sells at a discount? - Answers US Treasury Bills
Are Non-negotiable CDs easily traded? - Answers No, they are the least liquid money market instrument.
which of the following is NOT one of the primary rating agencies? - Answers Goldman Sachs
What type of security does Freddie Mac (FHLMC) issue? - Answers Government Sponsored Enterprise
debt
Which of the following is NOT a type of commercial paper? - Answers exchange traded notes
Fair Value is used for marking to market, is the price that: - Answers is expected to be received in
transaction between willing parties
The Securities and Exchange Commission is the primary regulator for all the following except: - Answers
the municipal bond market
which issuer is NOT expressly backed by the US government? - Answers Federal Home Loan Banks
which standard of professional responsibility is applied by many jurisdictions for internal staff of the
government and recommended in the GFOA Sample Investment Policy? - Answers prudent person
who should a local government hire to get assistance in formulating and implementing investment
strategy? - Answers an investment advisor
what is the nominal rate of return? - Answers an observed rate of return that is NOT adjusted for
inflation
what is the real rate of return? - Answers is inflation adjusted. Real rates reflect the increase in
purchasing power.
lower rates in the short term, higher rates for long term investments is indicative of what type of yield
curve? - Answers upward sloping (normal) yield curve
what does a downward sloping yield curve indicate? - Answers that investors expect interest rates to
decline in the future
what does a flat yield curve indicate? - Answers people anticipate that inflation will decline in the future
yield to maturity is what? - Answers internal rate of return until the bond matures
yield to call is what? - Answers internal rate of return until the date of the bond's 1st call option
if market interest rates are higher than an existing bond, the bond will sell at a ?? - Answers discount
if the interest rate on an existing bond is higher than current market interest rates, the bond will sell at a
?? - Answers premium
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