MBA 702 COMPREHENSIVE EXAM QUESTIONS WITH
DETAILED VERIFIED AND 100% ACCURATE ANSWERS
BRAND NEW EXAM ALREADY GRADED (A+ PASS)
Bonds Ans✓✓✓Debt contract describing legal promises by a borrower
to the owner of the bond (lender).
Maturity of a Bond Ans✓✓✓Date that the borrower pays the last
payment (return of principal) to the bondholder
Par or Face Value of a Bond Ans✓✓✓Amount the firm is to repay upon
the maturity date.
Coupon Rate of a bond Ans✓✓✓Determines the amount of periodic
interest payments that the borrower will pay.
Yield to Maturity Ans✓✓✓Discount Rate -or the rate that forces the
price to equal the PV of the coupons and par
4 things to earn yield on a bond purchase Ans✓✓✓1. Hold bond until
maturity
2. Reinvest coupons at the fair yield
3. There can be no default
4. Market determined rates (yields) cannot change
, Yield Ans✓✓✓Fair return in the market for bonds with similar
characteristics
Premium Bond Ans✓✓✓A bond that is selling above its par value
because the yield is lower that the coupon rate.
Discount Bond Ans✓✓✓A bond priced below par value because the
coupon rate is lower than the yield.
Multivariate Model Ans✓✓✓Rate = RiskFree + DefaultRiskPremium +
MaturityRiskPremium + LiquidityPremium
Risk Free (RF) Ans✓✓✓Rate that makes aggregate savings equal
aggregate real investment in a simple economy
Default Risk Premium (DRP) Ans✓✓✓Depends on how likely the
borrower is to be willing and able to make the contractual payments as
scheduled
Maturity Risk Premium Ans✓✓✓A premium that reflects interest rate
risk.
Interest Rate Risk Ans✓✓✓How sensitive bond price is to changes in
the yield. "The risk of capital losses to which investors are exposed
because of changing interest rates."
DETAILED VERIFIED AND 100% ACCURATE ANSWERS
BRAND NEW EXAM ALREADY GRADED (A+ PASS)
Bonds Ans✓✓✓Debt contract describing legal promises by a borrower
to the owner of the bond (lender).
Maturity of a Bond Ans✓✓✓Date that the borrower pays the last
payment (return of principal) to the bondholder
Par or Face Value of a Bond Ans✓✓✓Amount the firm is to repay upon
the maturity date.
Coupon Rate of a bond Ans✓✓✓Determines the amount of periodic
interest payments that the borrower will pay.
Yield to Maturity Ans✓✓✓Discount Rate -or the rate that forces the
price to equal the PV of the coupons and par
4 things to earn yield on a bond purchase Ans✓✓✓1. Hold bond until
maturity
2. Reinvest coupons at the fair yield
3. There can be no default
4. Market determined rates (yields) cannot change
, Yield Ans✓✓✓Fair return in the market for bonds with similar
characteristics
Premium Bond Ans✓✓✓A bond that is selling above its par value
because the yield is lower that the coupon rate.
Discount Bond Ans✓✓✓A bond priced below par value because the
coupon rate is lower than the yield.
Multivariate Model Ans✓✓✓Rate = RiskFree + DefaultRiskPremium +
MaturityRiskPremium + LiquidityPremium
Risk Free (RF) Ans✓✓✓Rate that makes aggregate savings equal
aggregate real investment in a simple economy
Default Risk Premium (DRP) Ans✓✓✓Depends on how likely the
borrower is to be willing and able to make the contractual payments as
scheduled
Maturity Risk Premium Ans✓✓✓A premium that reflects interest rate
risk.
Interest Rate Risk Ans✓✓✓How sensitive bond price is to changes in
the yield. "The risk of capital losses to which investors are exposed
because of changing interest rates."
