JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-22

18/04/2025

Table of Contents

JAIIB Exam 2025 AFM Important Questions MCQs Quiz-22

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 Which of the following statements is TRUE regarding different types of bonds?
A. Fixed rate bonds have a coupon that varies with market interest rates.
B. Floating rate notes (FRNs) have a fixed coupon that remains unchanged throughout the bond’s life.
C. Zero-coupon bonds pay regular interest to the bondholder.
D. Zero-coupon bonds are issued at a discount and pay no regular interest.

Q.2 Which of the following bonds is considered below investment grade and offers a higher yield to compensate for higher risk?
A. Government bond
B. Convertible bond
C. High-yield (junk) bond
D. Covered bond

Q 3 What type of bond gives the holder the option to exchange it for shares of the issuing company?
A. Subordinated bond
B. Convertible bond
C. Perpetual bond
D. Inflation-indexed bond

Q.4 In which type of bond are principal and interest payments adjusted according to inflation?
A. Perpetual bond
B. Zero-coupon bond
C. Inflation-indexed bond
D. Equity-linked note

Q.5 What distinguishes a covered bond from an asset-backed security?
A. Covered bonds are unsecured, while ABS are secured.
B. Covered bonds’ assets stay on the issuer’s balance sheet.
C. Covered bonds are issued only by governments.
D. Asset-backed securities are not based on real assets.

Q.6 Which of the following bonds does NOT have a maturity date?
A. Government bond
B. Convertible bond
C. Perpetual bond
D. Floating rate note

Q.7 What is the key risk associated with bearer bonds?
A. Low interest payments
B. Default risk
C. Inflation risk
D. They can be lost or stolen, and ownership is not registered

Q.8. Which of the following best describes a callable bond?
A. A bond that converts into shares of stock
B. A bond that gives the investor the right to sell it early
C. A bond that allows the issuer to repay it before maturity
D. A bond that has no maturity date

Q.9 In a callable bond, what is the call premium?
A. A fee paid by the bondholder to extend the maturity
B. An extra interest payment received by the bondholder
C. The amount paid by the issuer above par when calling the bond early
D. The price of the bond in the secondary market

Q.10 What is a key feature of a putable (or retractable) bond?
A. It pays no interest during its life
B. It can be converted into stock
C. It allows the holder to demand early repayment from the issuer
D. It is only issued by governments

Q.11 Why might an investor prefer a putable bond over a standard bond?
A. To benefit from declining interest rates
B. To force repayment and reinvest if interest rates rise
C. To lock in a lower yield
D. To avoid reinvestment risk

Q.12 What is Yield to Maturity (YTM) in the context of bonds?
A. The interest rate paid annually by the issuer
B. The total return expected on a bond if held until maturity
C. The rate at which the bond was originally issued
D. The market price of the bond at maturity

Q.13 Yield to Maturity (YTM) is the discount rate that:
A. Maximizes the bond’s market price
B. Equals the bond’s par value to its market value
C. Equates the present value of all future cash flows to the current market price
D. Is fixed by the central ban

Q.14 Which of the following statements about bond pricing and yield to maturity (YTM) is/are correct?
1.When the market rate (YTM) is higher than the coupon rate, the bond trades at a discount.
2.Bond prices are directly proportional to changes in YTM.
3.The price of a long-term bond is more sensitive to interest rate changes than a short-term bond with the same coupon rate.
4.For equal changes in YTM, bond price increases are larger when YTM decreases than the price decreases when YTM increases.
A. Only 1 and 3
B. Only 1, 3, and 4
C. Only 2 and 4
D. All 1, 2, 3, and 4