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NEW QUESTION: 1
Kwagmyre Investments, Ltd., hold two bonds: a callable bond issued by Mudd Manufacturing Inc. and a putable bond issued by Precarious Builders. Both bonds have option adjusted spreads (OAS) of 135 basis points (bp). Kevin Grisly, a junior analyst at the firm, makes the following statements (each statement is independent). Apparently, Grisly could benefit from a CFA review course, because the only statement that could be CORRECT is:
A. Given a nominal spread for Precarious Builders of 110 bp, the option cost is -25 bp.
B. The cost of the call option on the Mudd bond is -15bp.
C. The Z-spread for Mudd's bond is based on the YTM.
D. The spread over the spot rates for a Treasury security similar to Mudd's bond is 145 bp.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
The "spread over the spot rates for a Treasury security similar to Mudd's bond" refers to the Z-spread on the bond.For a callable bond, the OAS < Z-spread, so this could be a true statement because 135bp < 145 bp.
The other statements are false. The option cost is calculated using the OAS and theZ-spread,not the nominal spread. The cost of the call option should be positive.(The issuer has to compensate for increased uncertainty from the call option.) The static spread (or Z-spread)is the spread over each of the spot rates in a given Treasury term structure,not the spread over the Treasury's YTM.
Following is a more detailed discussion:
The option-adjusted spread(OAS) is used when a bond has embedded options. The OAS can be thought of as the difference between the static or Z-spread and the option cost. For the exam, remember the following relationship between the static spread (Z-spread), the OAS, and the embedded option cost:
Z Spread - OAS = Option Cost in % terms
Remember the following option value relationships:

NEW QUESTION: 2

A. Option D
B. Option B
C. Option C
D. Option A
Answer: B

NEW QUESTION: 3
どれ文書は重要なステークホルダーに高レベルの報告を提供するために使用するべきであるか？
A. Statement of work
B. Communication plan
C. Project charter
D. Dashboard
Answer: D
Explanation:
References: Kim Heldman, CompTIA Project+ Study Guide, 2nd Edition, Sybex, Indianapolis, 2017, p. 325

NEW QUESTION: 4
Which of the following components need a server certificate when you configure the SAP HANA Automated Update function?
A. SAP HANA database
B. SAP HANA studio
C. Host agent
D. Update Manager
Answer: C,D