SERIES 7 TUTORING TIPS - THE BASICS OF BONDS

Series 7 Bond Factors & Price Volatility

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There are three major factors that impact a bond's price:

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1. Maturity

2. Nominal rate

3. Credit rating

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Two of these factors are directly related to changes in interest rates.  Can you name the two factors? If you cannot answer this question, you should consider working with a Series 7 Tutor. 

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Finance Exam Tutor has written over 350 series 7 suitability questions.  We may distribute some of these suitability questions to series 7 students

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Here is a sample question:

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52. One of your customers thinks that interest rates will fall substantially over the next several years and wants to take advantage of this environment.  Which of the following bonds should you recommend to her?

A. A Treasury bond with a 30-year maturity and 5% coupon rate
B. A Treasury bond with a 30-year maturity and no coupon (zero)
C. A Treasury note with a 9-year maturity and a 4% coupon rate
D. A Treasury note with a 9-year maturity and no coupon (zero)
 

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