Part 3: Investment Assets
Paper V — Investment-linked Long Term Insurance · Part 3: Investment Assets
Further reading: Investment Assets study notes →
Which of the following statements about Money Market Instruments are correct? I. Certificate of Deposit II. Ordinary shares III. Convertible bonds
Why: Money market instruments are short-term debt instruments, typically with maturity of less than one year. A Certificate of Deposit (CD) is a short-term deposit instrument issued by banks and is a money market instrument. The other options are capital market instruments (equities, long-term bonds, real estate).
What does the coupon rate of a bond refer to?
Why: The coupon rate is the fixed annual interest rate set at bond issuance, calculated based on the bond's face value. For example, a bond with face value $1,000 and coupon rate 5% pays $50 interest per year. The coupon rate differs from market interest rates; changes in market rates affect the bond's market price.
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