bond-instruments-structures — Debt Capital Markets Practice Questions

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1. What does a 5-year bond described as 'NC2' signify regarding its call protection?
2. Which of the following describes a 'step-up' coupon in a callable bond?
3. Which type of investor is a 'natural buyer' of floating-rate notes due to their need to match floating-rate as
4. A 102 call premium is equivalent to paying:
5. If a bond is 'callable at par,' what is the issuer's redemption cost per $1,000 of face value?
6. What is a 'call schedule' for a corporate bond?
7. What is meant by the term 'compounding in arrears' for a SOFR-based floating-rate note?
8. What is a 'deferred call'?
9. If a company has a leverage-based pricing grid and SOFR rises significantly while leverage stays the same, wha
10. What is meant by the 'bond floor' in the context of yield analysis?
11. A 'make-whole' call differs from a standard 'fixed-price' call because the redemption price of a make-whole ca
12. If a bond has a 'Par Call' feature starting 6 months before maturity, what does this mean?
13. What is the main disadvantage for an issuer when using a 'make-whole' call instead of a 'fixed-price' call?
14. If the compounded SOFR for a given period is 4.50%, what is the all-in annualized coupon for that period?
15. Which benchmark has replaced LIBOR as the standard reference rate for dollar-denominated leveraged loans?
16. What is 'seniority' in the context of a capital stack?
17. In a Collateralized Loan Obligation (CLO), which tranche is the first to absorb losses from the underlying loa
18. Which feature of a covered bond provides 'dual recourse' to the investor?
19. What phenomenon describes a bond's price moving toward its par value as it nears maturity, assuming interest r
20. If all other factors remain constant, how has the Discount Margin (DM) changed?
21. If a 5-year FRN is issued with an Original Issue Discount (OID) at a price of 99.00 and a quoted margin of 400
22. Which component of the Discount Margin calculation is affected by the choice of day-count convention (e.g., Ac
23. Why might a private equity sponsor prefer to include PIK debt in a leveraged buyout (LBO) structure?
24. Why is the 1-year call likely to be the YTW?
25. Which of the following best describes the 'Term Loan B' (TLB) in a leveraged finance stack?
26. Which term describes the phenomenon where the principal of a PIK bond grows because interest is added to it ra
27. If SOFR is 1.15%, what base rate is used?
28. What is the main reason an investor might find a PIK toggle note attractive despite its high risk?
29. An institutional investor is evaluating a 5-year Floating-Ra… — If the market's required DM for this credit re
30. Where does PIK debt typically sit in the capital stack relative to senior secured loans?