LOMA 361 - CHAPTER 5 EXAM
QUESTIONS AND ANSWERS. VERIFIED
2026.
Accumulated depreciation - ANS The total amount of depreciation allocated to an asset as of
a specified date.
admitted asset - ANS An asset whose full value is reported on the Assets page of the Annual
Statement.
amortized cost - ANS An asset's book value after its cost has been adjusted for applicable
amortization.
bond - ANS A debt security issued by a borrower, typically a corporation or government
entity.
bond discount - ANS The amount by which a bond's purchase price is lower than its par
value.
bondholder - ANS The purchaser, or owner, of a bond.
bond issuer - ANS The entity that sells a bond to raise money.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, bond premium - ANS The amount by which a bond's purchase price is higher than its par
value.
cash dividend on stock - ANS A cash payment that a company periodically distributes to the
owners of its preferred stock and common stock.
commercial mortgage-backed security (CMBS) - ANS A type of mortgage-backed security that
is secured by a pool of commercial mortgages.
common stock - ANS A type of stock that usually entitles the owner to (1) vote on the
selection of directors and on other important company matters and (2) receive dividends on the
stock, if they are declared.
corporate bond - ANS A bond issued by a corporation.
coupon payment - ANS A periodic interest payment made on a bond.
coupon rate - ANS The interest rate specified on a bond.
debt security - ANS A security that represents an obligation of indebtedness owed by a
business, a government, or an agency.
derivative security - ANS A security that derives its value from other securities.
effective rate of return - ANS The actual rate of return on a bond, found by dividing the
bond's annual interest by its purchase price.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS AND ANSWERS. VERIFIED
2026.
Accumulated depreciation - ANS The total amount of depreciation allocated to an asset as of
a specified date.
admitted asset - ANS An asset whose full value is reported on the Assets page of the Annual
Statement.
amortized cost - ANS An asset's book value after its cost has been adjusted for applicable
amortization.
bond - ANS A debt security issued by a borrower, typically a corporation or government
entity.
bond discount - ANS The amount by which a bond's purchase price is lower than its par
value.
bondholder - ANS The purchaser, or owner, of a bond.
bond issuer - ANS The entity that sells a bond to raise money.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, bond premium - ANS The amount by which a bond's purchase price is higher than its par
value.
cash dividend on stock - ANS A cash payment that a company periodically distributes to the
owners of its preferred stock and common stock.
commercial mortgage-backed security (CMBS) - ANS A type of mortgage-backed security that
is secured by a pool of commercial mortgages.
common stock - ANS A type of stock that usually entitles the owner to (1) vote on the
selection of directors and on other important company matters and (2) receive dividends on the
stock, if they are declared.
corporate bond - ANS A bond issued by a corporation.
coupon payment - ANS A periodic interest payment made on a bond.
coupon rate - ANS The interest rate specified on a bond.
debt security - ANS A security that represents an obligation of indebtedness owed by a
business, a government, or an agency.
derivative security - ANS A security that derives its value from other securities.
effective rate of return - ANS The actual rate of return on a bond, found by dividing the
bond's annual interest by its purchase price.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
