SOFE SOFE Certification SOFE-CFE Questions & Answers

• Question 111:

  The instrument that involves a contract between two parties to exchange interest payments on a specified principal amount (referred to as the notional principal) for a specific period is called:

  A. transfer rate

  B. interest rate swap

  C. interest relocation

  D. passing on interest rate

  Correct Answer: B

• Question 112:

  If the effective yield is lower than the nominal yield, the buyer will pay a:

  A. premium

  B. credit

  C. debt

  D. fee

  Correct Answer: A

• Question 113:

  A process in which whereby an issuer floats a second bond issue and uses those proceeds to escrow a sufficient amount of U.S. Treasuries to ensure that a call date and price can be met is called:

  A. post-refunding

  B. partial-payment

  C. pre-refunding

  D. full-payment

  Correct Answer: C

• Question 114:

  The bonds, which are backed by the full faith and credit of the issuing body is called:

  A. General obligation bonds

  B. loan-backed bonds

  C. structured bonds

  D. revenue bonds

  Correct Answer: A

• Question 115:

  Insurance companies sometimes issue instruments that have the characteristics of both debt and equity; these instruments are commonly referred to as:

  A. General notes

  B. Domiciliary notes

  C. Long-term bond notes

  D. surplus notes

  Correct Answer: D

• Question 116:

  Which bonds have interest payment coupons attached, which are presented to the issuer to obtain payments of interest?

  A. General

  B. Discounted

  C. Bearer

  D. Nominal

  Correct Answer: C

• Question 117:

  What are corporate obligations considered having a higher default risk and a lower credit rating?

  A. corporate bonds

  B. municipal bonds

  C. junk bonds

  D. taxation bonds

  Correct Answer: C

• Question 118:

  The intrinsic value of money, referred to as the real interest rate by economists.

  A. True

  B. False

  Correct Answer: A

• Question 119:

  Dollar repurchase agreements are commonly referred to as dollar roll transactions.

  A. True

  B. False

  Correct Answer: A

• Question 120:

  For the seller in a _________________agreement, a liability is recorded for the amount of proceeds of the sale and the sold mortgage-backed securities are not removed from the accounting records.

  A. investment income

  B. dollar reverse repurchase

  C. dollar-resale payment

  D. resale interest income

  Correct Answer: B