FINANCE 306 REVIEW 2026
COMPREHENSIVE EXAMINATION SET
UPDATED 100% CORRECT.
◉ pure discount bonds. Answer: Zero-coupon bonds
◉ yield to maturity. Answer: The rate of return of an investment in a
bond that is held to its maturity date and makes the promised payments,
or the discount rate that sets the present value of the promised bond
payments equal to the current market price of the bond.
◉ spot interest rates. Answer: Default-free, zero-coupon yields
◉ zero-coupon yield curve. Answer: A plot of the yield of risk-free zero-
coupon bonds (STRIPS) as a function of the bond's maturity date
◉ coupon bonds. Answer: Bonds that pay regular coupon interest
payments up to maturity, when the face value is also paid.
◉ Treasury Notes. Answer: A type of U.S. Treasury coupon security,
currently traded in financial markets, with original maturities from one
to ten years
, ◉ treasury bonds. Answer: A type of U.S. Treasury coupon security,
currently traded in financial markets, with original maturities of more
than ten years
◉ Premium. Answer: A price at which coupon bonds trade that is greater
than their face value.
◉ par. Answer: A price at which coupon bonds trade that is equal to their
face value.
◉ dirty price or invoice price. Answer: A bond's actual cash price
◉ clean price. Answer: A bond's cash price less an adjustment for
accrued interest, the amount of the next coupon payment that has already
accrued
◉ corporate bonds. Answer: Bonds issued by corporations
◉ credit risk. Answer: The risk of default by the issuer of any bond that
is not default free; it is an indication that the bond's cash flows are not
known with certainty
◉ investment grade bonds. Answer: Bonds in the top four categories of
creditworthiness with a low risk of default
COMPREHENSIVE EXAMINATION SET
UPDATED 100% CORRECT.
◉ pure discount bonds. Answer: Zero-coupon bonds
◉ yield to maturity. Answer: The rate of return of an investment in a
bond that is held to its maturity date and makes the promised payments,
or the discount rate that sets the present value of the promised bond
payments equal to the current market price of the bond.
◉ spot interest rates. Answer: Default-free, zero-coupon yields
◉ zero-coupon yield curve. Answer: A plot of the yield of risk-free zero-
coupon bonds (STRIPS) as a function of the bond's maturity date
◉ coupon bonds. Answer: Bonds that pay regular coupon interest
payments up to maturity, when the face value is also paid.
◉ Treasury Notes. Answer: A type of U.S. Treasury coupon security,
currently traded in financial markets, with original maturities from one
to ten years
, ◉ treasury bonds. Answer: A type of U.S. Treasury coupon security,
currently traded in financial markets, with original maturities of more
than ten years
◉ Premium. Answer: A price at which coupon bonds trade that is greater
than their face value.
◉ par. Answer: A price at which coupon bonds trade that is equal to their
face value.
◉ dirty price or invoice price. Answer: A bond's actual cash price
◉ clean price. Answer: A bond's cash price less an adjustment for
accrued interest, the amount of the next coupon payment that has already
accrued
◉ corporate bonds. Answer: Bonds issued by corporations
◉ credit risk. Answer: The risk of default by the issuer of any bond that
is not default free; it is an indication that the bond's cash flows are not
known with certainty
◉ investment grade bonds. Answer: Bonds in the top four categories of
creditworthiness with a low risk of default
