FI 412 Exam 1 Questions AND Correct Answers
Banker's Acceptances - ✔✔Orders for banks to pay a
specified amount to the bearer upon meeting
conditions, often related to international trade.
Board of Governors (BoG) - ✔✔The main governing
body of the Federal Reserve System, consisting of
members appointed by the President.
Bond Price and YTM Relationship - ✔✔Inverse
relationship; higher YTM leads to lower bond prices
Capital Gain Yield - ✔✔Price change of the bond over
time
Commercial Paper - ✔✔Unsecured short-term debt
issued by large corporations.
, Conducting monetary policy - ✔✔The process by which
the Federal Reserve manages the money supply and
interest rates to achieve economic objectives.
Coupon Bond - ✔✔Regular interest payments until
maturity, then principal repaid
Coupon Rate - ✔✔Annual interest payment as a
percentage of face value
Current Yield - ✔✔Annual coupon payment divided by
bond price
Default Risk - ✔✔Higher default risk raises yield relative
to risk-free.
Demand Curve - ✔✔Downward sloping; lower prices
attract more investors.
Banker's Acceptances - ✔✔Orders for banks to pay a
specified amount to the bearer upon meeting
conditions, often related to international trade.
Board of Governors (BoG) - ✔✔The main governing
body of the Federal Reserve System, consisting of
members appointed by the President.
Bond Price and YTM Relationship - ✔✔Inverse
relationship; higher YTM leads to lower bond prices
Capital Gain Yield - ✔✔Price change of the bond over
time
Commercial Paper - ✔✔Unsecured short-term debt
issued by large corporations.
, Conducting monetary policy - ✔✔The process by which
the Federal Reserve manages the money supply and
interest rates to achieve economic objectives.
Coupon Bond - ✔✔Regular interest payments until
maturity, then principal repaid
Coupon Rate - ✔✔Annual interest payment as a
percentage of face value
Current Yield - ✔✔Annual coupon payment divided by
bond price
Default Risk - ✔✔Higher default risk raises yield relative
to risk-free.
Demand Curve - ✔✔Downward sloping; lower prices
attract more investors.
