FIN 300 Exam 2 Question and answers
correct 2025
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.
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
A Treasury yield curve plots Treasury interest rates relative to which one of
the following? - correct answer ✔Maturity
Which one of the following risk premiums compensates for the inability to
easily resell a bond prior to maturity? - correct answer ✔Liquidity
The taxability risk premium compensates bondholders for which one of the
following? - correct answer ✔A bond's unfavorable tax status.
Which bond would you generally expect to have the highest yield? - correct
answer ✔Long-term, taxable junk bond
correct 2025
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.
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
A Treasury yield curve plots Treasury interest rates relative to which one of
the following? - correct answer ✔Maturity
Which one of the following risk premiums compensates for the inability to
easily resell a bond prior to maturity? - correct answer ✔Liquidity
The taxability risk premium compensates bondholders for which one of the
following? - correct answer ✔A bond's unfavorable tax status.
Which bond would you generally expect to have the highest yield? - correct
answer ✔Long-term, taxable junk bond
