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FNCE 3000 Exam 2
Ch5-Ch6
| Question | Answer |
|---|---|
| the principal amount of a bond that is repaid at the end of the loan term | face value |
| a real rate of return is defined as a rate that has been adjusted for __ | inflation |
| the coupon rate and current yield are less than the bond's yield to maturity | discount bond |
| compensates bond investors for the risk of changes in interest rates | interest rate risk premium |
| when a bond's coupon rate = both the bond's current yield and its YTM | bond priced at par value |
| present value of a bond increases when ___ | the coupon rate decreases |
| provides compensation to a bondholder when a bond is not readily marketable at its full value | liquidity premium |
| a series of equal payments made at the end of each period | ordinary annuity |
| a series of equal payments that continue forever with no end date | perpetuity |
| one payment at the end | pure discount loan |
| payments reduce principal over time | amortized loan |
| pay interest each period, and pay principal at the end | interest-only loan |
| describes interest behavior | compound loan |
| combination of loan structures | complex loan |