Study Guide III

*Indicates that you must know these without using your notes or book

1.  Calculating accrued interest between coupon payments

2.  Callable bonds*

3.  Convertible bonds*

4.  Market conversion value

5.  Conversion premium

6.  Puttable bonds*

7.  Floating rate bonds*

8.  Preferred stock*

9.  Eurobonds*

10.  Inverse floaters*

11.  Asset-backed bonds*

12. Pay-in-kind bonds*

13.  Catastrophe bonds*

14.  Indexed bonds

15.  Bond pricing

16.  Annuities

17.  Relationship between interest rates and bond prices

18.  Yield to maturity

19.  Current yield

20.  Realized compound return

21.  Determinants of bond safety*

22.  Features of bond indentures*

23.  Default premium

24.  Credit default swaps*

25.  Expectations theory and the yield curve

26.  Liquidity preference theory and the yield curve

27.  Relationship between bond prices and maturity

28.  Relationship between bond prices and coupons

29.  Relationship between bond prices and yield to maturity

30.  Calculating duration

31.  Factors affecting duration

32.  Duration of a level perpetuity

33.  Price risk vs. reinvestment risk

34.  Immunization

35.  Rebalancing

36.  Types of bond swaps in active bond management*

37.  Call options

38.  Put options

39.  In the money vs. out of the money

40.  European vs. American options*

41.  Other types of options*

42.  Value of call options at expiration to buyers

43.  Value of call options at expiration to sellers

44.  Value of put options at expiration to buyers

45.  Value of put options at expiration to sellers

46.  Use of options as leverage

47.  Use of options for insurance

48.  Protective puts

49.  Covered calls

50.  Straddles

51.  Strips and straps

52.  Spreads

53.  Collars

54.  Option-like securities*

55.  Exotic options*

56.  Intrinsic vs. time value

57.  Call option valuation function

58.  Determinants of option values

59.  Black-Scholes option valuation for calls

60.  Black-Scholes option valuation for puts

 . 

Recommended Problems

 Chapter 10 – 9, 16, 20, 22, 27, 30, 38, CFA 3

Chapter 11 – 8, 9, 10, 11, 13, 14, 16, 19, 27

Chapter 15 – 4, 10, 11, 12, 15, 17, 22, 27

Chapter 16 – 5, 16, 17

Answers to recommended problems