SDSU BA323
BA 323 SDSU Exam 2 Questions with
Correct Answers 2025 Graded A+
time value of money -Correct Answer ✔Adjusting the value of cash flows based on when
the cash flows are received.
Future Value -Correct Answer ✔the amount of money in the future that an amount of
money today will yield, given prevailing interest rates
Present Value -Correct Answer ✔The value today of a future cash flow or series of cash
flows
Compounding -Correct Answer ✔The arithmetic process of determining the final value
of a cash flow or series of cash flows when compound interest is applied
Know how to solve for the future value, present value, the interest rate, or time. -Correct
Answer ✔FVn = PV(1+ I)^n
N: Time / Number of years, I: Interest rate per year • Aside: use annual compounding
§PV, FV: • Amount of Money Starting With (PV) or Ending With (FV)
Value of an annuity -Correct Answer ✔the sum of all deposits plus all interest paid.
KEY POINT: • To solve, we use PMT and set either Future value or present value to zero
Understand how different compounding periods impact cash flows (which compounding
period would you prefer?) -Correct Answer ✔Daily! Interest on interest!
SDSU BA323
, SDSU BA323
bond -Correct Answer ✔A long-term debt instrument in which a borrower agrees to
make payments of principal and interest, on specific dates, to the holders of the bond.
What are the five key features of a bond? -Correct Answer ✔Par value, coupon interest
rate, maturity date, issue date, and yield to maturity.
par value -Correct Answer ✔the amount that an investor pays to purchase a bond and
that will be repaid to the investor at maturity.
Par value = Future value
coupon interest rate -Correct Answer ✔the percentage of a bond's par value that will be
paid annually, typically in two equal semiannual payments, as interest.
(stated interest rate paid by the issuer. Multiply by par value to get dollar payment of
interest.)
Mature Date -Correct Answer ✔years until the bond must be repaid.
issue date -Correct Answer ✔when the bond was issued
yield to maturity -Correct Answer ✔the rate of return a bondholder will receive if the
bond is held to maturity. "promised yield".
call provision -Correct Answer ✔a provision in a bond contract that gives the issuer the
right to redeem the bonds under specified terms prior to the normal maturity date.
SDSU BA323
BA 323 SDSU Exam 2 Questions with
Correct Answers 2025 Graded A+
time value of money -Correct Answer ✔Adjusting the value of cash flows based on when
the cash flows are received.
Future Value -Correct Answer ✔the amount of money in the future that an amount of
money today will yield, given prevailing interest rates
Present Value -Correct Answer ✔The value today of a future cash flow or series of cash
flows
Compounding -Correct Answer ✔The arithmetic process of determining the final value
of a cash flow or series of cash flows when compound interest is applied
Know how to solve for the future value, present value, the interest rate, or time. -Correct
Answer ✔FVn = PV(1+ I)^n
N: Time / Number of years, I: Interest rate per year • Aside: use annual compounding
§PV, FV: • Amount of Money Starting With (PV) or Ending With (FV)
Value of an annuity -Correct Answer ✔the sum of all deposits plus all interest paid.
KEY POINT: • To solve, we use PMT and set either Future value or present value to zero
Understand how different compounding periods impact cash flows (which compounding
period would you prefer?) -Correct Answer ✔Daily! Interest on interest!
SDSU BA323
, SDSU BA323
bond -Correct Answer ✔A long-term debt instrument in which a borrower agrees to
make payments of principal and interest, on specific dates, to the holders of the bond.
What are the five key features of a bond? -Correct Answer ✔Par value, coupon interest
rate, maturity date, issue date, and yield to maturity.
par value -Correct Answer ✔the amount that an investor pays to purchase a bond and
that will be repaid to the investor at maturity.
Par value = Future value
coupon interest rate -Correct Answer ✔the percentage of a bond's par value that will be
paid annually, typically in two equal semiannual payments, as interest.
(stated interest rate paid by the issuer. Multiply by par value to get dollar payment of
interest.)
Mature Date -Correct Answer ✔years until the bond must be repaid.
issue date -Correct Answer ✔when the bond was issued
yield to maturity -Correct Answer ✔the rate of return a bondholder will receive if the
bond is held to maturity. "promised yield".
call provision -Correct Answer ✔a provision in a bond contract that gives the issuer the
right to redeem the bonds under specified terms prior to the normal maturity date.
SDSU BA323
