ASU FIN 300 EXAM 1 CHAPTERS 1 TO 4
CERTIFICATION SCRIPT 2026 VERIFIED
ANSWERS GRADED A+
⩥ Which of the following is FALSE regarding adjustable-rate mortgages
(ARMs)? Answer: The interest rate on ARM may reset at irregular
intervals based on the lender's calculation of the funding cost of the loan
⩥ Bonds sell at a premium when the market rate of interest is: Answer:
Less than the bond's coupon rate
⩥ Which of the following statements is true of a bond's yield to
maturity? Answer: The yield to maturity of a bond is the discount rate
that makes the present value of the coupon and principal payments equal
to the price of the bond
⩥ Which of the following statements is true? Answer: The longer the
maturity of a security, the greater its interest rate risk
⩥ Which of the following theorems explains the relationship between
interest rates and bond prices? Answer: For a given change in intesrest
rates, the prices of long-term bonds will change more drastically than the
prices of short-term bonds
, ⩥ If the yield curve has a positive slope: Answer: Interest rates are
expected to be higher in the future.
⩥ Holding period return: Answer: total return over some investment
(holding period)
- consists of 2 components:
1) capital appreciation
2) Income
⩥ HPR formula Answer: (Ending Price - Beginning Price + Cash
Dividend) / Beginning Price
⩥ Expected Return Answer: Average possible returns from an
investment where each return is heightened by the probability that it will
occur
⩥ Expected return formula Answer: = (p1)(R1) + (p2)(R2)
⩥ Forecasting Answer: Used in corp finance to predict future states of
nature
-Includes:
-- economic trends
--Business conditions
CERTIFICATION SCRIPT 2026 VERIFIED
ANSWERS GRADED A+
⩥ Which of the following is FALSE regarding adjustable-rate mortgages
(ARMs)? Answer: The interest rate on ARM may reset at irregular
intervals based on the lender's calculation of the funding cost of the loan
⩥ Bonds sell at a premium when the market rate of interest is: Answer:
Less than the bond's coupon rate
⩥ Which of the following statements is true of a bond's yield to
maturity? Answer: The yield to maturity of a bond is the discount rate
that makes the present value of the coupon and principal payments equal
to the price of the bond
⩥ Which of the following statements is true? Answer: The longer the
maturity of a security, the greater its interest rate risk
⩥ Which of the following theorems explains the relationship between
interest rates and bond prices? Answer: For a given change in intesrest
rates, the prices of long-term bonds will change more drastically than the
prices of short-term bonds
, ⩥ If the yield curve has a positive slope: Answer: Interest rates are
expected to be higher in the future.
⩥ Holding period return: Answer: total return over some investment
(holding period)
- consists of 2 components:
1) capital appreciation
2) Income
⩥ HPR formula Answer: (Ending Price - Beginning Price + Cash
Dividend) / Beginning Price
⩥ Expected Return Answer: Average possible returns from an
investment where each return is heightened by the probability that it will
occur
⩥ Expected return formula Answer: = (p1)(R1) + (p2)(R2)
⩥ Forecasting Answer: Used in corp finance to predict future states of
nature
-Includes:
-- economic trends
--Business conditions
