BA 323 EXAM 2 2026 STATISTICAL ANALYSIS
AND DATA INTERPRETATION PRACTICE SET
ANSWERS FULL SOLUTION
◉ yield to maturity.
Answer: the rate of return a bondholder will receive if the bond is
held to maturity. "promised yield".
◉ call provision.
Answer: a provision in a bond contract that gives the issuer the right
to redeem the bonds under specified terms prior to the normal
maturity date.
*Companies like these incase interest rates go down! Investors
don't!
◉ call premium.
Answer: Penalty paid by the corporation is a bond is called (amount
in excess of par-value).
Bond investors require higher yields
Typically requires 5 to 10 years to call
, ◉ When does the value of a bond equal its par value?.
Answer: At maturity!
◉ premium bond.
Answer: a bond that sells above its par value; occurs whenever the
going rate of interest is below the coupon rate
◉ discount bond.
Answer: A bond that sells below its par value; occurs whenever the
going rate of interest is above the coupon rate
◉ Yield to Call.
Answer: The rate of return earned on a bond when it is called before
its maturity date. • Use the call price rather than the maturity value
◉ Reinvestment Risk.
Answer: The risk that a decline in interest rates will lead to a decline
in income from a bond portfolio.
( the concern that rates will fall, and future CFs will have to be
reinvested at lower rates, hence reducing income)
AND DATA INTERPRETATION PRACTICE SET
ANSWERS FULL SOLUTION
◉ yield to maturity.
Answer: the rate of return a bondholder will receive if the bond is
held to maturity. "promised yield".
◉ call provision.
Answer: a provision in a bond contract that gives the issuer the right
to redeem the bonds under specified terms prior to the normal
maturity date.
*Companies like these incase interest rates go down! Investors
don't!
◉ call premium.
Answer: Penalty paid by the corporation is a bond is called (amount
in excess of par-value).
Bond investors require higher yields
Typically requires 5 to 10 years to call
, ◉ When does the value of a bond equal its par value?.
Answer: At maturity!
◉ premium bond.
Answer: a bond that sells above its par value; occurs whenever the
going rate of interest is below the coupon rate
◉ discount bond.
Answer: A bond that sells below its par value; occurs whenever the
going rate of interest is above the coupon rate
◉ Yield to Call.
Answer: The rate of return earned on a bond when it is called before
its maturity date. • Use the call price rather than the maturity value
◉ Reinvestment Risk.
Answer: The risk that a decline in interest rates will lead to a decline
in income from a bond portfolio.
( the concern that rates will fall, and future CFs will have to be
reinvested at lower rates, hence reducing income)
