FIN 300 Exam 2 2026 Questions and
Answers
The bond market requires a return of 9.8 percent on the five-year bonds issued by
JW Industries. The 9.8 percent is referred to as which one of the following? -
Correct answer-Yield to maturity
A bond that is payable to whomever has physical possession of the bond is said to
be in: - Correct answer-Bearer form
Jason's Paints just issued 20-year, 7.25 percent, unsecured bonds at par. These
bonds fit the definition of which one of the following terms? - Correct answer-
Debenture
A note is generally defined as: - Correct answer-An unsecured bond with an initial
maturity of 10 years or less.
A sinking fund is managed by a trustee for which one of the following purposes? -
Correct answer-Early bond redemption.
A bond that can be paid off early at the issuer's discretion is referred to as being
which type of bond? - Correct answer-Callable.
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, A $1,000 face value bond can be redeemed early at the issuer's discretion for
$1,030, plus any accrued interest. The additional $30 is called the: - Correct
answer-Call premium.
The items included in an indenture that limit certain actions of the issuer in order to
protect a bondholder's interests are referred to as the: - Correct answer-Protective
covenants.
A bond is quoted at a price of $1,011. This price is referred to as the: - Correct
answer-Clean price
Real rates are defined as nominal rates that have been adjusted for which of the
following? - Correct answer-Inflation
Interest rates that include an inflation premium are referred to as: - Correct answer-
Nominal rates
The pure time value of money is known as the: - Correct answer-Term structure of
interest rates.
Which one of the following premiums is compensation for the possibility that a
bond issuer may not pay a bond's interest or principal payments as expected? -
Correct answer-Default risk
©C0PYRIGHT 2025, ALL RIGHTS RESERVED 2
Answers
The bond market requires a return of 9.8 percent on the five-year bonds issued by
JW Industries. The 9.8 percent is referred to as which one of the following? -
Correct answer-Yield to maturity
A bond that is payable to whomever has physical possession of the bond is said to
be in: - Correct answer-Bearer form
Jason's Paints just issued 20-year, 7.25 percent, unsecured bonds at par. These
bonds fit the definition of which one of the following terms? - Correct answer-
Debenture
A note is generally defined as: - Correct answer-An unsecured bond with an initial
maturity of 10 years or less.
A sinking fund is managed by a trustee for which one of the following purposes? -
Correct answer-Early bond redemption.
A bond that can be paid off early at the issuer's discretion is referred to as being
which type of bond? - Correct answer-Callable.
©C0PYRIGHT 2025, ALL RIGHTS RESERVED 1
, A $1,000 face value bond can be redeemed early at the issuer's discretion for
$1,030, plus any accrued interest. The additional $30 is called the: - Correct
answer-Call premium.
The items included in an indenture that limit certain actions of the issuer in order to
protect a bondholder's interests are referred to as the: - Correct answer-Protective
covenants.
A bond is quoted at a price of $1,011. This price is referred to as the: - Correct
answer-Clean price
Real rates are defined as nominal rates that have been adjusted for which of the
following? - Correct answer-Inflation
Interest rates that include an inflation premium are referred to as: - Correct answer-
Nominal rates
The pure time value of money is known as the: - Correct answer-Term structure of
interest rates.
Which one of the following premiums is compensation for the possibility that a
bond issuer may not pay a bond's interest or principal payments as expected? -
Correct answer-Default risk
©C0PYRIGHT 2025, ALL RIGHTS RESERVED 2
