MBA 702 Module 2 Final Exam All
Questions Answered Correct 2026
Updated.
bonds, stocks, options, future contracts, risk adjusted present value, expected - Answer
Valuation consists of:
1
2
3
4
The basic process for each is the same, even though the formulas might look different. The
theory is finding the ____ of all the ___ future cash flows.
bond, borrower, owner - Answer ___ is a debt contract describing legal promises by a ___ to
the ___ of the bond (lender).
maturity, coupon rate, discount rate - Answer Things needed to know about bonds:
1
2
3
maturity, last payment, return of principal, nominal, par, face value - Answer ___ (bond) is
the date that borrower pays the ____ (aka ____) to the bondholder, which is the ___ amount of
money lent or called ___ or ___ of the bond
par value of a bond, 1000, 100 - Answer ___ is the amount of money that bond issuers
promise to be repaid bondholders at a future date. Most corporate bonds have a value of
$____, although investment services are frequently quoted as price per ___, ignoring
denomination altogether.
coupon rate, periodic, semiannual, annual - Answer ___ determines the amount of the ___
interest payments that the borrower will pay. Most corporate bonds pay ___ interest. We will
assume ____ here.
discount rate, coupons, par - Answer ____ for bonds is called the yield of maturity. The rate
forces the price to equal the PV of the ____ and ___
, yield of maturity - Answer Discount rate is called the ____
yield, maturity, coupons, fair yield, default, market, fair value - Answer If a person bought a
bond, 4 things must happen to actually earn a ____.
1 Hold the bond until ____
2 Reinvest ____ at the ____
3 There can be no ____
4 ___ determined rates (yields) cannot change
*Condition 4 is so unlikely that is is not very useful to talk about whether a bondholder will earn
the yield.*
The trick is to pick the correct yield to use to find the ____, which can normally be found with
CAPM R=rf+B(rm-rf), however this does not work with bonds.
fair return, market - Answer A yield as the ____ in the ___ for bonds with similar
characteristics using:
*R=rf+DRP+MRP+LP
par, coupon rate, yield - Answer When a bond is priced at ___, it is because the ___ is
*EQUAL TO* the ____.
coupons, above, premium bond - Answer When a bond's yield is LOWER than the coupon
rate, people will pay extra to get the big ____, causing the price to be ___ 1000, or a ____
below, discount rate - Answer When a bond's yield is HIGHER than the coupon rate, it causes
the price to be ___ 1000, or a ___
premium bond - Answer The coupon rate is larger than the yielding rate make this a ____
discount bond - Answer The coupon rate is lower than the yielding rate ____ making this a
____
coupon, yield - Answer When companies are designing a new bond issue, they would like for
the ____ to be close to the current market ____. This makes it easier to predict how much
money they will be able to raise from the bonds.
Questions Answered Correct 2026
Updated.
bonds, stocks, options, future contracts, risk adjusted present value, expected - Answer
Valuation consists of:
1
2
3
4
The basic process for each is the same, even though the formulas might look different. The
theory is finding the ____ of all the ___ future cash flows.
bond, borrower, owner - Answer ___ is a debt contract describing legal promises by a ___ to
the ___ of the bond (lender).
maturity, coupon rate, discount rate - Answer Things needed to know about bonds:
1
2
3
maturity, last payment, return of principal, nominal, par, face value - Answer ___ (bond) is
the date that borrower pays the ____ (aka ____) to the bondholder, which is the ___ amount of
money lent or called ___ or ___ of the bond
par value of a bond, 1000, 100 - Answer ___ is the amount of money that bond issuers
promise to be repaid bondholders at a future date. Most corporate bonds have a value of
$____, although investment services are frequently quoted as price per ___, ignoring
denomination altogether.
coupon rate, periodic, semiannual, annual - Answer ___ determines the amount of the ___
interest payments that the borrower will pay. Most corporate bonds pay ___ interest. We will
assume ____ here.
discount rate, coupons, par - Answer ____ for bonds is called the yield of maturity. The rate
forces the price to equal the PV of the ____ and ___
, yield of maturity - Answer Discount rate is called the ____
yield, maturity, coupons, fair yield, default, market, fair value - Answer If a person bought a
bond, 4 things must happen to actually earn a ____.
1 Hold the bond until ____
2 Reinvest ____ at the ____
3 There can be no ____
4 ___ determined rates (yields) cannot change
*Condition 4 is so unlikely that is is not very useful to talk about whether a bondholder will earn
the yield.*
The trick is to pick the correct yield to use to find the ____, which can normally be found with
CAPM R=rf+B(rm-rf), however this does not work with bonds.
fair return, market - Answer A yield as the ____ in the ___ for bonds with similar
characteristics using:
*R=rf+DRP+MRP+LP
par, coupon rate, yield - Answer When a bond is priced at ___, it is because the ___ is
*EQUAL TO* the ____.
coupons, above, premium bond - Answer When a bond's yield is LOWER than the coupon
rate, people will pay extra to get the big ____, causing the price to be ___ 1000, or a ____
below, discount rate - Answer When a bond's yield is HIGHER than the coupon rate, it causes
the price to be ___ 1000, or a ___
premium bond - Answer The coupon rate is larger than the yielding rate make this a ____
discount bond - Answer The coupon rate is lower than the yielding rate ____ making this a
____
coupon, yield - Answer When companies are designing a new bond issue, they would like for
the ____ to be close to the current market ____. This makes it easier to predict how much
money they will be able to raise from the bonds.
