Financial Management Final UPDATED Actual Exam Questions and CORRECT Answers
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Course
Financial management
Institution
Financial Management
Financial Management Final UPDATED
Actual Exam Questions and CORRECT
Answers
99.486% x $1,000 = $994.86 - CORRECT ANSWER- Aivree is buying a $1,000 face
value bond at a quoted price of 99.486. The bond carries a coupon rate of 5.6 %, with interest
paid semiannually. The next interest payme...
Financial Management Final UPDATED
Actual Exam Questions and CORRECT
Answers
99.486% x $1,000 = $994.86 - CORRECT ANSWER✔✔- Aivree is buying a $1,000 face
value bond at a quoted price of 99.486. The bond carries a coupon rate of 5.6 %, with interest
paid semiannually. The next interest payment is four months from today. What is the CLEAN
price of this bond?
greater than 7 % but less than 8 % - CORRECT ANSWER✔✔- A par value bond offers a
coupon rate of 7 % with semiannual interest payments. The effective annual rate provided by
these bonds must be:
Fisher Effect - CORRECT ANSWER✔✔- The relationship between nominal rates, real rates,
and inflation is known as the:
Yield to Maturity - CORRECT ANSWER✔✔- The rate of return required by investors in the
market for owning a bond is called the:
A Zero Coupon Bond - CORRECT ANSWER✔✔- has a market price that is computed using
semiannual compounding of interest
Yield to Maturity (2) - CORRECT ANSWER✔✔- A newspaper listing of bond prices has an
"asked yield" column. This yield is based on the asked price and represents the:
$1,000 ; $30 - CORRECT ANSWER✔✔- A bond with a coupon rate of 6 % that pays
interest semiannually and is priced at par will have a market price of _____________ and
interest payments in the amount of _______________ each.
101.364% x $1,000 + (.0775 x $1,000 x 4/12) = $1,039.47 - CORRECT ANSWER✔✔-
Nathan is buying a $1,000 face value bond at a quoted price of 101.364. The bond carries a
coupon rate of 7.75 %, with interest paid semiannually. The nest interest payments is two
months from today. What is the DIRTY price of this bond?
,At issuance, the bond's yield to maturity is 5.5 % - CORRECT ANSWER✔✔- Aspens is
preparing a bond offering with a coupon rate of 5.5 %. The bonds will be repaid in 10 years.
The company plans to issue the bonds at par value and pay interest semiannually. Which one
of the following statements is correct?
Coupon - CORRECT ANSWER✔✔- The stated interest payment, in dollars, made on a bond
each period is called the bond's:
Mason's bond will INCREASE in value by $41 - CORRECT ANSWER✔✔- Mason's has 5-
year, 8 % annual coupon bond with a $1,000 par value. Dixon's has a 10-year, 8 % annual
coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 8 %.
Which of the following is correct if the market rate decreases to 7 %
101.633% x $1,000 = $1,016.33 - CORRECT ANSWER✔✔- A corporation bond is
currently quoted at 101.633. What is the MARKET PRICE of a bond with a $1,000 face
value?
A discount ; greater than - CORRECT ANSWER✔✔- All else constant, a bond will sell at
__________ when the yield to maturity is ___________ the coupon rate
Par value - CORRECT ANSWER✔✔- A bond with a face value of $1,000 that sells for
$1,000 in the market is called a _______ bond
.062 x $1,000 x 5/12 = $25.83 - CORRECT ANSWER✔✔- Casey just purchased a $1,000
face value bond at an invoice price of $1,288.16. The bond has a coupon rate of 6.2 %,
semiannual interest payments, and the next interest payment occurs one month from today.
Of the amount paid for the bond, what was the dollar amount of the ACCRUED INTEREST?
a Yield to Maturity that is Less than the Coupon Rate - CORRECT ANSWER✔✔- All else
constant, a coupon bod that is selling at a premium, must have:
Since the bond is selling at par, the yield to maturity will equal the coupon rate of 6 % -
CORRECT ANSWER✔✔- The bonds issued by Manson amp; Son bear a coupon of 6 %,
payable semiannually. The bond matures in 15 years and has a $1,000 face value. Currently,
the bond sells at par. What is the YIELD to MATURITY?
, Maturity - CORRECT ANSWER✔✔- The specified date on which the principal amount of a
bond is repaid is called the bond's:
Taxable rate x ( 1 - t ) - CORRECT ANSWER✔✔- The interest rate for a tax-exempt bond
that equates to the rate paid on a taxable bond is computed as:
increases OR the coupon rate decreases - CORRECT ANSWER✔✔- All else held constant,
interest rate risk will increase when the time to maturity:
Liquidity - CORRECT ANSWER✔✔- The _______ premium is that portion of the bond
yield that represents compensation for potential difficulties that might be encountered should
the bond holder wish to sell the bond prior maturity.
Discount - CORRECT ANSWER✔✔- A bond with a face value of $1,000 that sells for less
than $1,000 in the market is called a _______ bond.
Exempt from federal income taxation and may or may not be exempt from state taxation -
CORRECT ANSWER✔✔- The interest paid on any municipal bond is:
Coupon Rate - CORRECT ANSWER✔✔- The annual interest paid by a bond divided by the
bond's face value is called the:
Inflation - CORRECT ANSWER✔✔- The __________ premium is that portion of a nominal
interest rate or bond yield that represents compensation for executed future loss in purchasing
power.
Baa ; BB - CORRECT ANSWER✔✔- Which one of these combinations of bond ratings
represents a crossover situation?
Face Value - CORRECT ANSWER✔✔- The principal amount of a bond that is repaid at the
end of the loan term is called the bond's:
Zero Coupon - CORRECT ANSWER✔✔- A bond that makes no coupon payments and is
initially priced at a deep discount is called a _________ bond.
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