MBA 702 MODULE 2 COMPREHENSIVE EXAM QUESTIONS
WITH DETAILED VERIFIED AND 100% ACCURATE
ANSWERS BRAND NEW EXAM ALREADY GRADED (A+
PASS)
bonds, stocks, options, future contracts, risk adjusted present value,
expected Ans✓✓✓Valuation consists of:
1
2
3
4
The basic process for each is the same, even though the formulas might
look different. The theory is finding the ____ of all the ___ future cash
flows.
bond, borrower, owner Ans✓✓✓___ is a debt contract describing legal
promises by a ___ to the ___ of the bond (lender).
maturity, coupon rate, discount rate Ans✓✓✓Things needed to know
about bonds:
1
2
3
,maturity, last payment, return of principal, nominal, par, face value
Ans✓✓✓___ (bond) is the date that borrower pays the ____ (aka ____)
to the bondholder, which is the ___ amount of money lent or called ___
or ___ of the bond
par value of a bond, 1000, 100 Ans✓✓✓___ is the amount of money
that bond issuers promise to be repaid bondholders at a future date. Most
corporate bonds have a value of $____, although investment services are
frequently quoted as price per ___, ignoring denomination altogether.
coupon rate, periodic, semiannual, annual Ans✓✓✓___ determines the
amount of the ___ interest payments that the borrower will pay. Most
corporate bonds pay ___ interest. We will assume ____ here.
discount rate, coupons, par Ans✓✓✓____ for bonds is called the yield
of maturity. The rate forces the price to equal the PV of the ____ and
___
yield of maturity Ans✓✓✓Discount rate is called the ____
yield, maturity, coupons, fair yield, default, market, fair value
Ans✓✓✓If a person bought a bond, 4 things must happen to actually
earn a ____.
1 Hold the bond until ____
2 Reinvest ____ at the ____
, 3 There can be no ____
4 ___ determined rates (yields) cannot change
*Condition 4 is so unlikely that is is not very useful to talk about
whether a bondholder will earn the yield.*
The trick is to pick the correct yield to use to find the ____, which can
normally be found with CAPM R=rf+B(rm-rf), however this does not
work with bonds.
fair return, market Ans✓✓✓A yield as the ____ in the ___ for bonds
with similar characteristics using:
*R=rf+DRP+MRP+LP
par, coupon rate, yield Ans✓✓✓When a bond is priced at ___, it is
because the ___ is *EQUAL TO* the ____.
coupons, above, premium bond Ans✓✓✓When a bond's yield is
LOWER than the coupon rate, people will pay extra to get the big ____,
causing the price to be ___ 1000, or a ____
below, discount rate Ans✓✓✓When a bond's yield is HIGHER than the
coupon rate, it causes the price to be ___ 1000, or a ___
WITH DETAILED VERIFIED AND 100% ACCURATE
ANSWERS BRAND NEW EXAM ALREADY GRADED (A+
PASS)
bonds, stocks, options, future contracts, risk adjusted present value,
expected Ans✓✓✓Valuation consists of:
1
2
3
4
The basic process for each is the same, even though the formulas might
look different. The theory is finding the ____ of all the ___ future cash
flows.
bond, borrower, owner Ans✓✓✓___ is a debt contract describing legal
promises by a ___ to the ___ of the bond (lender).
maturity, coupon rate, discount rate Ans✓✓✓Things needed to know
about bonds:
1
2
3
,maturity, last payment, return of principal, nominal, par, face value
Ans✓✓✓___ (bond) is the date that borrower pays the ____ (aka ____)
to the bondholder, which is the ___ amount of money lent or called ___
or ___ of the bond
par value of a bond, 1000, 100 Ans✓✓✓___ is the amount of money
that bond issuers promise to be repaid bondholders at a future date. Most
corporate bonds have a value of $____, although investment services are
frequently quoted as price per ___, ignoring denomination altogether.
coupon rate, periodic, semiannual, annual Ans✓✓✓___ determines the
amount of the ___ interest payments that the borrower will pay. Most
corporate bonds pay ___ interest. We will assume ____ here.
discount rate, coupons, par Ans✓✓✓____ for bonds is called the yield
of maturity. The rate forces the price to equal the PV of the ____ and
___
yield of maturity Ans✓✓✓Discount rate is called the ____
yield, maturity, coupons, fair yield, default, market, fair value
Ans✓✓✓If a person bought a bond, 4 things must happen to actually
earn a ____.
1 Hold the bond until ____
2 Reinvest ____ at the ____
, 3 There can be no ____
4 ___ determined rates (yields) cannot change
*Condition 4 is so unlikely that is is not very useful to talk about
whether a bondholder will earn the yield.*
The trick is to pick the correct yield to use to find the ____, which can
normally be found with CAPM R=rf+B(rm-rf), however this does not
work with bonds.
fair return, market Ans✓✓✓A yield as the ____ in the ___ for bonds
with similar characteristics using:
*R=rf+DRP+MRP+LP
par, coupon rate, yield Ans✓✓✓When a bond is priced at ___, it is
because the ___ is *EQUAL TO* the ____.
coupons, above, premium bond Ans✓✓✓When a bond's yield is
LOWER than the coupon rate, people will pay extra to get the big ____,
causing the price to be ___ 1000, or a ____
below, discount rate Ans✓✓✓When a bond's yield is HIGHER than the
coupon rate, it causes the price to be ___ 1000, or a ___
