1 Marks: 1 What is the price of a 3 year bond, 8% semi-annual coupon, (FV100), if the YTM is 6%? Choose one answer.

a. 105.3460 b. 105.4172 c. 105.6621 d. 94.7579 Question 2 Marks: 1 6.5%, 3 year bond, FV 100, coupon semi-annual, DC 30/360.What is the PV01 for the portfolio if the YTM is 8%? Choose one answer. a. 0.0256 b. 0.0283 c. 0.0158 d. 0.0143 Question 3 Marks: 1 The Coal India IPO is expected to suck out over 15000 crores of rupee funds from the system, as the issue is expected to be heavily oversubscribed. As a bond trader, what should be your trading strategy? Choose one answer. a. Buy bond as yield will go up b. Buy bond as yield will go down c. Sell bond as yield will go up d. Sell bond as yield will go down Question 4 Marks: 1

Which of the following factors, other things remaining the same, will decrease the bond price? Choose one answer. a. Increase in the coupon rate b. Decrease in the yield of the bond c. Increase in the yield of the bond Question 5 Marks: 1 6.5%, 3 year bond, FV 100, coupon semi-annual, DC 30/360.What is the Macaulay's Duration if the YTM is 8%? Choose one answer. a. 2.7682 b. 2.6617 c. 2.6062 d. 2.5060 Question 6 Marks: 1 The G-sce yield curve is expected to flatten. What would you do as a bond trader? Choose one answer. a. Buy Long term bonds as long term yields will go down b. Sell Long Term bonds as long term yields will go up c. Buy Short Term bonds as short term yields will go down d. b & c Question 7 Marks: 1 A 3 year bond, 8% semi-annual coupon, (FV100), if the YTM is 6%, what is the PVBP of the bond? Choose one answer. a. 0.0271 b. 2.722

c. 0.2767 d. 0.0278 Question 8 Marks: 1 There is an auction for a 10 year bond. The market price, pre-auction, for a similar bond in the market is 108.50, which translates into a yield of 6.75%. Now, in the auction, you decide to bid at 3 price levels INR 108.75, INR 109 and INR 108.25. The cut-off announcement declares the cut-off as 108.53. If this were a French auction, at what price will you get the instrument? Choose one answer. a. Both at INR 109 and INR 108.75 b. At cut-off price i.e. 108.53 c. At INR 109 d. At INR 108.75 Question 9 Marks: 1 There is an auction announced for issuance of a new 10-year bond. Market yield preauction for 10year GOI securities, is around 7.15%. You put in 3 bids: a) 7.26% b) 7.05 % c) 7.20%. The cut-off announced is at 7.14%. Which bid/bids will be accepted? Choose one answer. a. 7.05% b. 7.26% and 7.20% c. All three i.e 7.26%, 7.05% and 7.20% d. 7.2% Question 10 Marks: 1 A 3 year bond, 8% semi-annual coupon (FV100), if the YTM is 6%, what is the Macaulay duration? Choose one answer. a. 2.7365 b. 2.6571

c. 2.6546 d. 2.7342 Question 11 Marks: 1 Citi Bank pays 10% on a 1 year fixed deposit compounded monthly. If Rs.10,000 is deposited initially, how much will it grow to at the end of 1 year? Choose one answer. a. 11,000 b. 10,700 c. 11,047 d. 31,384 Question 12 Marks: 1 6.5% coupon,3 year bond, FV 100,coupon semi-annual, DC 30/360. What is the Modified Duration if the YTM is 8%? Choose one answer. a. 2.7682 b. 2.6617 c. 2.6062 d. 2.5060 Question 13 Marks: 1 If a bank quoted you an yield of 6.50%, for a INR 100 T-bill (Act/365) maturing 160 days from now, what would be the price that you have to pay? Choose one answer. a. 97.18 b. 97.56 c. 97.23 d. 93.50

Question 14 Marks: 1 The interest payable on a bond is 12.00% per annum. The interest (simple interest) is paid semiannually. What is the interest amount on an investment of INR 1,00,000 between 1-Jan-2009 and 20Jun-2009?(Act/360 convention) Choose one answer. a. 4633 b. 4667 c. 5000 d. 4600 Question 15 Marks: 1 GoI issues a 5 year, 8% bond, coupon annual with a FV of INR 100. The interest rate falls by 100 basis points. Reacting to the interest rate change, GoI issues another bond @ 7%. What will be the effect on the yield of the 1st bond and its market price. Choose one answer. a. Yield =7% and Market Price =INR 104.10 b. Yield =7% and Market Price =INR 114.28 c. Yield =8% and Market Price =INR 104.10 d. Yield =8% and Market Price =INR 114.28