BSNS114 Exam with Questions and 100% Correct Answers
2 views 0 purchase
Course
BSNS114
Institution
BSNS114
What is a pure discount loan? (write full def)
a. interest is paid periodically and principle is paid at maturity
b. interest and principle are paid as a lump sum at maturity
c. equal payments are made regularly, including a portion of principle and interest -
Answer interest and principle are ...
BSNS114 Exam with Questions and 100%
Correct Answers
What is a pure discount loan? (write full def)
a. interest is paid periodically and principle is paid at maturity
b. interest and principle are paid as a lump sum at maturity
c. equal payments are made regularly, including a portion of principle and interest -
Answer interest and principle are paid as a lump sum at maturity
What is an interest only loan?
a. interest is paid periodically and principle is paid at maturity
b. interest and principle are paid as a lump sum at maturity
c. equal payments are made regularly, including a portion of principle and interest -
Answer interest is paid periodically and principle is paid at maturity
What is an amortised loan?
a. interest is paid periodically and principle is paid at maturity
b. interest and principle are paid as a lump sum at maturity
c. equal payments are made regularly, including a portion of principle and interest -
Answer equal payments are made regularly, including a portion of principle and interest
What loan payment structure do bonds use?
- interest only
- amortised loan
- pure discount loan - Answer interest only loan
, which loan payment structure do mortgages use?
- interest only
- amortised loan
- pure discount loan - Answer amortised loan
what are the two different levels of security on a bond - Answer collateralised,
debentures
what are the two ways that bonds are classified? - Answer level of security, level of
seniority
Pure discount bonds:
- trade at par
- trade at a premium to par
- trade at a discount to par - Answer trade at a discount to par
pure discount bonds: (write which is true)
- offer a lower yield than other bonds with the same maturity and risk
- offer a higher yield than other bonds with the same maturity and risk because they
don't pay interest
- pay interest at regular intervals
- trade at a premium to par today - Answer offer a higher yield than other bonds with
the same maturity and risk because they don't pay interest
a decrease in YTM (interest rates) will cause:
- bonds to increase in price, as the PV of cash flows increases
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Examsplug. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
