BA 323 SDSU EXAM 2 ACTUAL PAPER 2026
QUESTIONS WITH SOLUTIONS GRADED A+
◉ Future Value
Answer: the amount of money in the future that an amount of money
today will yield, given prevailing interest rates
◉ Present Value
Answer: The value today of a future cash flow or series of cash flows
◉ Compounding
Answer: The arithmetic process of determining the final value of a
cash flow or series of cash flows when compound interest is applied
◉ Know how to solve for the future value, present value, the interest
rate, or time.
Answer: FVn = PV(1+ I)^n
N: Time / Number of years, I: Interest rate per year • Aside: use
annual compounding §PV, FV: • Amount of Money Starting With (PV)
or Ending With (FV)
,◉ Value of an annuity
Answer: the sum of all deposits plus all interest paid.
KEY POINT: • To solve, we use PMT and set either Future value or
present value to zero
◉ Understand how different compounding periods impact cash
flows (which compounding period would you prefer?)
Answer: Daily! Interest on interest!
◉ bond
Answer: A long-term debt instrument in which a borrower agrees to
make payments of principal and interest, on specific dates, to the
holders of the bond.
◉ What are the five key features of a bond?
Answer: Par value, coupon interest rate, maturity date, issue date,
and yield to maturity.
◉ par value
Answer: the amount that an investor pays to purchase a bond and
that will be repaid to the investor at maturity.
, Par value = Future value
◉ coupon interest rate
Answer: the percentage of a bond's par value that will be paid
annually, typically in two equal semiannual payments, as interest.
(stated interest rate paid by the issuer. Multiply by par value to get
dollar payment of interest.)
◉ Mature Date
Answer: years until the bond must be repaid.
◉ issue date
Answer: when the bond was issued
◉ yield to maturity
Answer: the rate of return a bondholder will receive if the bond is
held to maturity. "promised yield".
◉ call provision
QUESTIONS WITH SOLUTIONS GRADED A+
◉ Future Value
Answer: the amount of money in the future that an amount of money
today will yield, given prevailing interest rates
◉ Present Value
Answer: The value today of a future cash flow or series of cash flows
◉ Compounding
Answer: The arithmetic process of determining the final value of a
cash flow or series of cash flows when compound interest is applied
◉ Know how to solve for the future value, present value, the interest
rate, or time.
Answer: FVn = PV(1+ I)^n
N: Time / Number of years, I: Interest rate per year • Aside: use
annual compounding §PV, FV: • Amount of Money Starting With (PV)
or Ending With (FV)
,◉ Value of an annuity
Answer: the sum of all deposits plus all interest paid.
KEY POINT: • To solve, we use PMT and set either Future value or
present value to zero
◉ Understand how different compounding periods impact cash
flows (which compounding period would you prefer?)
Answer: Daily! Interest on interest!
◉ bond
Answer: A long-term debt instrument in which a borrower agrees to
make payments of principal and interest, on specific dates, to the
holders of the bond.
◉ What are the five key features of a bond?
Answer: Par value, coupon interest rate, maturity date, issue date,
and yield to maturity.
◉ par value
Answer: the amount that an investor pays to purchase a bond and
that will be repaid to the investor at maturity.
, Par value = Future value
◉ coupon interest rate
Answer: the percentage of a bond's par value that will be paid
annually, typically in two equal semiannual payments, as interest.
(stated interest rate paid by the issuer. Multiply by par value to get
dollar payment of interest.)
◉ Mature Date
Answer: years until the bond must be repaid.
◉ issue date
Answer: when the bond was issued
◉ yield to maturity
Answer: the rate of return a bondholder will receive if the bond is
held to maturity. "promised yield".
◉ call provision
