SOFE AFE Designation AFE Questions & Answers

• Question 21:

  In what, securities involve in repos are not delivered on the settlement date of the agreement and the contract may be extended upon mutual agreement of the buyer-lender and seller-borrower.

  A. Financial servicing

  B. Price-cap

  C. Rollover

  D. Purchasing agreements

  Correct Answer: C

• Question 22:

  What limits the repurchase price to a stipulated percentage of the face amount of the certificate?

  A. Price-cap provision

  B. Investment provision

  C. Limit provision

  D. Par cap provision

  Correct Answer: D

• Question 23:

  agreements may contain par cap provisions that could significantly alter the economics of the transactions.

  A. Yield-maintenance

  B. Price-cap

  C. Fixed-coupon

  D. Accounting

  Correct Answer: A

• Question 24:

  In a yield-maintenance agreement:

  A. the securities repurchased may have a different stated interest rate from that of the securities sold and are generally priced to result in substantially the same yield.

  B. the securities repurchased may have the same stated interest rate from that of the securities sold and are generally priced to result in substantially the same yield.

  C. the securities repurchased may have a different stated interest rate from that of the securities sold and are generally priced to result in substantially the different yield.

  D. the securities repurchased may have a same stated interest rate from that of the securities sold and are generally priced to result in substantially the different yield.

  Correct Answer: B

• Question 25:

  The securities repurchased have the same stated interest rate as, and maturities similar to, the securities sold and are generally priced to result in substantially the same yield is known as:

  A. Yield-maintenance agreements

  B. Variable-coupon agreements

  C. Fixed-coupon agreement

  D. None of the above

  Correct Answer: C

• Question 26:

  The two most common types of dollar rolls are:

  A. Fixed-coupon and yield-maintenance agreements

  B. Variable-coupon and yield-maintenance agreements

  C. Fixed-coupon and Accounting agreements

  D. Variable -coupon and Principal agreements

  Correct Answer: A

• Question 27:

  Dollar rolls differ from regular repurchase agreements due to which of the following characteristics in the securities sold and repurchased.

  A. they are represented by different certificates

  B. they are collateralized by different but similar mortgage pools

  C. they generally have different principal amounts

  D. All of the above

  Correct Answer: D

• Question 28:

  The difference between the purchase price and the repurchase price, or sale price, plus accrued interest on the security represents:

  A. Accounting agreement

  B. Investment income

  C. Dollar price

  D. Saving price

  Correct Answer: B

• Question 29:

  As defined in Accounting Standards Codification, dollar purchase agreements are the agreements to sell and repurchase similar and identical securities.

  A. True

  B. False

  Correct Answer: B

• Question 30:

  The maturity of which agreement is fixed by the contract and depends on the needs of the borrower and the willingness of the lender?

  A. Fixed agreement

  B. Standard agreement

  C. Short-term agreement

  D. Repurchase agreement

  Correct Answer: D