Question Bank UNIT 1

Assignment 1
1. Who are the issuers of debt securities?
2. What does seniority ranking of debt securities determine?
3. Name two common types of bonds.
4. What are embedded provisions in bonds?
5. What is the main purpose of securitization?
6. Briefly explain what asset-backed securities are.
7. Mention one key feature of debt securities.
8. Describe the types of entities that typically issue debt securities.
9. Explain the difference between government bonds and corporate bonds.
10. How does the seniority ranking of debt securities affect the order of repayment in case
of issuer default?
11. What are convertible bonds, and how do they differ from traditional bonds?
12. Discuss how embedded provisions, such as call and put options, can affect
bondholders.
13. Outline the steps involved in the securitization of assets.
14. List and explain two benefits of asset-backed securities for both investors and issuers.
15. Compare and contrast debt securities and equity securities in terms of investor returns,
risk, and ownership rights.
16. In the event of issuer bankruptcy, elaborate on how the seniority ranking of debt
securities influences the recovery process for different classes of bondholders.
17. Discuss the suitability of municipal bonds for income-seeking investors compared to
high-yield corporate bonds, considering risk and tax implications.
18. Explain the mechanics of convertible bonds, including the conversion ratio,
conversion price, and the factors that might influence the decision to convert.
19. Analyze how embedded provisions, such as call and put options, can affect the
valuation of bonds and the potential outcomes for bondholders.
20. Evaluate the advantages and potential risks associated with securitization for financial
institutions and the broader economy.