BSNS114 Exam Study Guide with
Questions and 100% Correct Answers
pure discount loan (zero coupon bond) - Answer interest and principle are paid
at maturity
borrower receives money today and repays a single sum at same time in the future
interest only loan - Answer interest is paid periodically and principal is paid at maturity
amortised loan - Answer equal payments are made includes partial interest and
principle for each payment
process where the loan is paid off by making regular principal reductions
bank debt - Answer can be used for borrowing small amounts of money
can be short or long term
used if the company is not well known
can meet unanticipated or seasonal financing needs
bond - Answer is a security that is issued in connection with borrowing
agreement between company and investor (bond holder)
can add extras that a bank loan won't
carries more favourable financing terms than bank loan
bond indenture - Answer contract between bond issuer and
bondholder protects the bond holder
provided legal recourse if interest or principal payments are missed.
, bonds may be classified by - Answer level of
security level of seniority
bond level of security - Answer collateralised - secured by a physical
asset debentures- unsecured but secured in AUS + NZ
bond level of seniority - Answer senior takes priority over junior then under junior is
subordinated class
interest only loan coupon bond - Answer interest is paid PERIODICALLY
principal repaid at MATURITY
YTM - Answer year to maturity - market interest rate used to discount coupon
and principal payments to give current bond price
bonds differ in - Answer conditions of
borrowing coupon rate
interest and non interest paying bonds
conditions of borrowing a bond varies: - Answer between corporations
YTM
coupon rate and frequency of payments
yield to maturity
coupon rate of a bond - Answer either fixed or floating
Questions and 100% Correct Answers
pure discount loan (zero coupon bond) - Answer interest and principle are paid
at maturity
borrower receives money today and repays a single sum at same time in the future
interest only loan - Answer interest is paid periodically and principal is paid at maturity
amortised loan - Answer equal payments are made includes partial interest and
principle for each payment
process where the loan is paid off by making regular principal reductions
bank debt - Answer can be used for borrowing small amounts of money
can be short or long term
used if the company is not well known
can meet unanticipated or seasonal financing needs
bond - Answer is a security that is issued in connection with borrowing
agreement between company and investor (bond holder)
can add extras that a bank loan won't
carries more favourable financing terms than bank loan
bond indenture - Answer contract between bond issuer and
bondholder protects the bond holder
provided legal recourse if interest or principal payments are missed.
, bonds may be classified by - Answer level of
security level of seniority
bond level of security - Answer collateralised - secured by a physical
asset debentures- unsecured but secured in AUS + NZ
bond level of seniority - Answer senior takes priority over junior then under junior is
subordinated class
interest only loan coupon bond - Answer interest is paid PERIODICALLY
principal repaid at MATURITY
YTM - Answer year to maturity - market interest rate used to discount coupon
and principal payments to give current bond price
bonds differ in - Answer conditions of
borrowing coupon rate
interest and non interest paying bonds
conditions of borrowing a bond varies: - Answer between corporations
YTM
coupon rate and frequency of payments
yield to maturity
coupon rate of a bond - Answer either fixed or floating
