GARP Exam 2016-FRR Topic 1 Question 2 Discussion

Actual exam question for GARP's 2016-FRR exam

Question #: 2
Topic #: 1

[All 2016-FRR Questions]

Which of the following statements regarding bonds is correct?

I . Interest rates on bonds are typically stated on an annualized rate.

II . Bonds can pay floating coupons that are directly linked to various interest rate indices.

III . Convertible bonds have an element of prepayment risk.

IV . Callable bonds have an element of equity risk.

AI only

BI and II

CI, II, and III

DII, III, and IV

Show Suggested Answer

Suggested Answer: C

by Ernie at May 05, 2025, 02:25 PM

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Matt

9 hours ago

Bonds with equity risk? That's like putting a cat in charge of the canary. I'm sticking with B) I and II. Let's keep this bond party simple, folks!

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Jose

3 days ago

Wow, this exam is really testing my bond expertise. I'm going to go with C) I, II, and III. Gotta love those convertible bonds and their prepayment surprises!

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Teddy

8 days ago

I think the correct answer is D) II, III, and IV, because callable bonds have equity risk as well.

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Charlena

10 days ago

Ha! Equity risk in bonds? That's like mixing oil and water. I'm going with B) I and II. Keep it simple, right?

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Aliza

13 days ago

I believe the answer is C) I, II, and III, because convertible bonds also have prepayment risk.

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Ciara

1 months ago

I agree with Glory, because interest rates are usually annualized and bonds can have floating coupons.

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Glory

1 months ago

I think the correct answer is B) I and II.

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Hmm, this is a tricky one. I'm going with C) I, II, and III. Convertible bonds do have an element of prepayment risk, but I'm not sure about the equity risk for callable bonds. Guess I need to brush up on my bond knowledge!

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Lyndia

8 days ago

I believe it's D) II, III, and IV. Callable bonds do have an element of equity risk, along with convertible bonds having prepayment risk.

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Michel

9 days ago

I'm going with C) I, II, and III. Convertible bonds do have prepayment risk, but I'm not sure about the equity risk for callable bonds.

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Germaine

14 days ago

I think it's B) I and II. Interest rates are typically annualized and bonds can have floating coupons linked to interest rate indices.

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Socorro

2 months ago

I think the correct answer is B) I and II. Bonds typically have an annualized interest rate, and they can have floating coupons linked to various indices. The other statements seem a bit off.

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Virgie

19 days ago

I believe it's D) II, III, and IV.

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Arthur

25 days ago

I'm not sure, I think it might be C) I, II, and III.

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Sue

29 days ago

I agree, I think the correct answer is B) I and II.

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GARP Exam 2016-FRR Topic 1 Question 2 Discussion

Contribute your Thoughts:

Matt

Jose

Teddy

Charlena

Aliza

Ciara

Glory

Millie

Lyndia

Michel

Germaine

Socorro

Virgie

Arthur

Sue