FINC 3610- EXAM 2 QUESTIONS WITH
100% CORRECT ANSWERS | LATEST
VERSION 2025/2026.
Annuity - ANS finite series of equal payments that occur at regular intervals
ordinary annuity - ANS first payment occurs at the end of the period
annuity due - ANS first payment occurs at the beginning of the period
perpetuity - ANS infinite series of equal payments
effective annual rate (EAR) - ANS actual rate paid (or received) after accounting for
compounding that occurs during the year
used for comparisons between different compounding periods
APR - ANS annual rate quoted by law
period rate times the number of periods per year
APR/ number periods per yr
coupon - ANS the stated interest payment made on a bond
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, face value - ANS the principal amount of a bond that is repaid at the end of the term. also
called par value
coupon rate - ANS the annual coupon divided by the face value of a bond
maturity - ANS the specified date on which the principal amount of a bond is paid
yield to maturity (YTM) - ANS the rate required in the market on a bond
coupon > YTM - ANS price > par
premium
coupon< YTM - ANS price < par
discount
indenture - ANS the written agreement between the corporation and the lender detailing
the terms of the debt issue
registered form - ANS the form of bond issue in which the registrar of the company records
ownership of each bond; payment is made directly to the owner of record
bearer form - ANS the form of bond issue in which the bond is issued without record of the
owner's name; payment is made to whomever holds the bond
debenture - ANS an unsecured debt, usually with maturity of 10 years or more
note - ANS unsecured debt, usually with a maturity under 10 years
sinking fund - ANS an account managed by the bond trustee for early bond redemption
2 | Page @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
100% CORRECT ANSWERS | LATEST
VERSION 2025/2026.
Annuity - ANS finite series of equal payments that occur at regular intervals
ordinary annuity - ANS first payment occurs at the end of the period
annuity due - ANS first payment occurs at the beginning of the period
perpetuity - ANS infinite series of equal payments
effective annual rate (EAR) - ANS actual rate paid (or received) after accounting for
compounding that occurs during the year
used for comparisons between different compounding periods
APR - ANS annual rate quoted by law
period rate times the number of periods per year
APR/ number periods per yr
coupon - ANS the stated interest payment made on a bond
1 | Page @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, face value - ANS the principal amount of a bond that is repaid at the end of the term. also
called par value
coupon rate - ANS the annual coupon divided by the face value of a bond
maturity - ANS the specified date on which the principal amount of a bond is paid
yield to maturity (YTM) - ANS the rate required in the market on a bond
coupon > YTM - ANS price > par
premium
coupon< YTM - ANS price < par
discount
indenture - ANS the written agreement between the corporation and the lender detailing
the terms of the debt issue
registered form - ANS the form of bond issue in which the registrar of the company records
ownership of each bond; payment is made directly to the owner of record
bearer form - ANS the form of bond issue in which the bond is issued without record of the
owner's name; payment is made to whomever holds the bond
debenture - ANS an unsecured debt, usually with maturity of 10 years or more
note - ANS unsecured debt, usually with a maturity under 10 years
sinking fund - ANS an account managed by the bond trustee for early bond redemption
2 | Page @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
