SOA Exam 6

Section A

Questions

by Cynic

  1. What’s the difference between floating-rate, extendible-reset, and variable-rate bonds?

  2. What are the advantages/disadvantages of a bond call provision to the issuer? to the investor?

  3. What’s the difference between a noncallable and a nonrefundable bond?

  4. What are zero-coupon treasury securities?

  5. What are the factors that affect a floater’s price?

  6. What’s the difference between ARM (Adjustable-Rate Mortgage) and “Two-Step” Mortgage?

  7. What’s the difference between Graduate Payment Mortgage, Growing Equity Mortgage, and Tiered-Payment Mortgage?

  8. Describe the PSA (Public Securities Association) prepayment model.

  9. What is the OAS (Option-Adjusted Spread) model?

  10. Describe each of the following CMO types:
    1. Sequential-pay
    2. PAC
    3. TAC
    4. Companion
    5. Z-bond
    6. AD (Accretion-Directed)
    7. Floater and inverse
    8. IO and PO

  11. Describe the 3 approaches in evaluating CMOs.

  12. What are the characteristics of a convertible bond?

  13. What are the advantages/disadvantages of a convertible to the issuer? to the investor?

  14. What are the important GIC (Guaranteed Insurance Contract) characteristics in portfolio construction?

  15. What are embedded options in GIC and in mortgage?

  16. What are the advantages/disadvantages of a sinking fund provision to the investor?

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