BFIN 320 Principle of Finance Final Exam Questions with Correct Answers.

BFIN 320 Principle of Finance
Final Exam Questions with
Correct Answers
Present Value (PV) - Correct Answers: the value today of a future cash flow or series of cash flows



Future Value - Correct Answers: the amount your original deposit will be worth in the future based on
earning a specific interest rate over a specific period of time



Compound - Correct Answers: A substance made up of atoms of two or more different elements joined
by chemical bonds



Features of Corporate Bonds - Correct Answers: Long-term claims against company assets

Key terms:

Face(par) Value: (F) = 1000

Coupon Payment (C) is the fixed amount paid to the lenders for the life of the contract (typically semi-
annual or annual)

Coupa



Coupon Payment (PMT) - Correct Answers: the specified number of dollars of interest paid each year

the fixed amount paid to the lenders for the life of the contract (typically semi-annual or annual)



Coupon Rate - Correct Answers: the annual coupon divided by the face value of a bond

(C)/(F)



Vanilla Bonds (Debentures) - Correct Answers: typically unsecured

- Coupon payments fixed for the life of the bond

- Repay principal and retire the bonds at maturity

- Contracts have the features and provisions found in most bond covenants