28 CFA Level 2 Practice Exams Free Questions and Answers on Fixed Income

28 CFA Level 2 Practice Exams Free Questions and Answers on Fixed Income has proven to be a valuable study tool for CFA candidates preparing for the exam. In the multiple choice format, these CFA practice questions with instant answers give the entire coverage of basic knowledge in the most current curriculum in order to help learners approach the most updated information within the study process. Not only enhancing the good grounding of this topic, CFA level 2 practice questions free also boost up your skills and develop your technique in the next exam. Let’s start early from here and now to identify your weak areas, which allow you to fine tune your study plan in those last crucial weeks. Hope you pass and shout out your points in the comment below to compare with others.
To view full questions and answers, please kindly visit our site:  http://cfaexampreparation.com/914/28-cfa-level-2-practice-exams-free-questions-and-answers-on-fixed-income/

market expects future short-term interest rates to increase

• Inverted (expectation theory)
• Upward slope (market segmentation theory)
• downward sloping (market segmentation theory)
• Upward sloping (expectation theory)

extra expected return demanded by investors as compensation for the lower liquidity of long-term bonds

• Liquidity premium
• STRIPS
• Bid-cover ratio
• Sealed bid

market expects future short-term rates to decrease

• Upward sloping (expectation theory)
• market segmentation theory
• Inverted (expectation theory)
• Expectations theory

those that are replaced by on-the-run issues

• On-the-run treasury issue
• STRIPS
• Off-the-run issue
• t-bonds

securities that have 20-30 years maturityi. Semi-annual coupon bonds

• t-notes
• T-bills
• t-bonds
• TIPS

a supply and demand modeli. Lenders and borrowers have investment horizons and match maturities to their investment horizons

• market segmentation theory
• Upward slope (market segmentation theory)
• Inverted (expectation theory)
• Expectations theory

(separate trading of registered interest and principal securities)a. Basically ZCB t-notes/bonds because the treasury does not issue ZCB with maturities of over 1 year

• TIPS
• STRIPS
• T-bills
• Stripping

securities that mature in one year or less form issuancei. ZCB

• TIPS
• t-bonds
• T-bills
• t-notes

greater demand for short-term money in comparison to long-term moneya. Short-term yields will be lower

• market segmentation theory
• Upward slope (market segmentation theory)
• downward sloping (market segmentation theory)
• Upward sloping (expectation theory)

a. If yields go up, the price decline is lower for the more convex bondb. If yields go down, the price increase is higher for more convex bonds

• Competitive bids
• Bid-cover ratio
• Why is convexity valuable
• Convexity

greater demand for long-term money in comparison to short-term moneya. Long-term yields will be lower

• market segmentation theory
• Upward slope (market segmentation theory)
• Upward sloping (expectation theory)
• downward sloping (market segmentation theory)

an increase in yield results in a smaller price change than a decrease in yield of equal magnitudea. More curvature means more convexityb. Duration measures provide good approximations of price change only for small changes in yield

• t-notes
• Convexity
• TIPS
• Stripping