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FIN 300 (TEST #2) QUESTIONS AND ANSWERS
2025
A provision in a bond contract that gives the issuer the
right to recall the bond and repay it prior to the stated
maturity date is referred to as a(n): - ...ANSWER... ✔
✔call provision
A bond secured by tangible (real) assets is termed a
____________ bond. - ...ANSWER... ✔ ✔mortgage
a deposit in a foreign bank that is denominated in U.S.
dollars is called a: - ...ANSWER... ✔ ✔Eurodollar
deposit
Par value, maturity value, face value, and ___________
are used interchangeably to designate the borrowed
amount that must be repaid by the borrower. -
...ANSWER... ✔ ✔Principal value
An example of a short-term debt instrument is a: -
...ANSWER... ✔ ✔Treasury bond.
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a corporate bond's fixed coupon rate of interest results
in: - ...ANSWER... ✔ ✔fixed interest payments
As the principal value of a debt is repaid at the
maturity date, it is referred to as the ________ value. -
...ANSWER... ✔ ✔maturity
When the __________ value of debt is the same as its
face value, it is said to be selling at __________ value.
- ...ANSWER... ✔ ✔market; par
The principal value of debt: - ...ANSWER... ✔
✔represents the amount owed to the lender, which must
be repaid.
The ___________ must be repaid at some point during
the life of the debt. - ...ANSWER... ✔ ✔principal
value of debt.
Which os the following loans requires the principal
amounts to be repaid in several payments during the
lives of the loans? - ...ANSWER... ✔ ✔Installment
loans
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The date on which the principal amount of a debt is due
is referred to as the: - ...ANSWER... ✔ ✔maturity
date
Which of the following is a type of promissory note
issued by large, financially sound firms? - ...ANSWER...
✔ ✔commercial paper
Which of the following shor-term debts is issued in
denominations of $100,000 by large, financiially sound
firms? - ...ANSWER... ✔ ✔commercial paper
Loans from one bank to another bank are called: -
...ANSWER... ✔ ✔federal funds
Federal funds are borrowed by banks from other banks
with excess reserves to: - ...ANSWER... ✔ ✔meet the
reserve requirements of the Federal Reserve.
_______ are used to raise funds for projects that will
generate revenues that contribute to payment of interest
and repayment of debt. - ...ANSWER... ✔ ✔Revenue
bonds
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__________ are backed by government's ability to tax
its citizens. - ...ANSWER... ✔ ✔General obligation
bonds
A trustee guarantees that: - ...ANSWER... ✔ ✔the
terms of the bond indenture are carried out.
A trustee represents the: - ...ANSWER... ✔
✔bondholders
Most corporate bonds contain a call provision, which
gives the issuing firm the right to: - ...ANSWER... ✔
✔call in the bonds for redemption.
A provision that facilitates the orderly retirement of a
bond issue is a: - ...ANSWER... ✔ ✔sinking fund
A firm has the right to handle a sinking fund by
randomly calling for redemption a certain percentage
of the bonds each year at _________ value -
...ANSWER... ✔ ✔par
FIN 300 (TEST #2) QUESTIONS AND ANSWERS
2025
A provision in a bond contract that gives the issuer the
right to recall the bond and repay it prior to the stated
maturity date is referred to as a(n): - ...ANSWER... ✔
✔call provision
A bond secured by tangible (real) assets is termed a
____________ bond. - ...ANSWER... ✔ ✔mortgage
a deposit in a foreign bank that is denominated in U.S.
dollars is called a: - ...ANSWER... ✔ ✔Eurodollar
deposit
Par value, maturity value, face value, and ___________
are used interchangeably to designate the borrowed
amount that must be repaid by the borrower. -
...ANSWER... ✔ ✔Principal value
An example of a short-term debt instrument is a: -
...ANSWER... ✔ ✔Treasury bond.
,2|Page
a corporate bond's fixed coupon rate of interest results
in: - ...ANSWER... ✔ ✔fixed interest payments
As the principal value of a debt is repaid at the
maturity date, it is referred to as the ________ value. -
...ANSWER... ✔ ✔maturity
When the __________ value of debt is the same as its
face value, it is said to be selling at __________ value.
- ...ANSWER... ✔ ✔market; par
The principal value of debt: - ...ANSWER... ✔
✔represents the amount owed to the lender, which must
be repaid.
The ___________ must be repaid at some point during
the life of the debt. - ...ANSWER... ✔ ✔principal
value of debt.
Which os the following loans requires the principal
amounts to be repaid in several payments during the
lives of the loans? - ...ANSWER... ✔ ✔Installment
loans
,3|Page
The date on which the principal amount of a debt is due
is referred to as the: - ...ANSWER... ✔ ✔maturity
date
Which of the following is a type of promissory note
issued by large, financially sound firms? - ...ANSWER...
✔ ✔commercial paper
Which of the following shor-term debts is issued in
denominations of $100,000 by large, financiially sound
firms? - ...ANSWER... ✔ ✔commercial paper
Loans from one bank to another bank are called: -
...ANSWER... ✔ ✔federal funds
Federal funds are borrowed by banks from other banks
with excess reserves to: - ...ANSWER... ✔ ✔meet the
reserve requirements of the Federal Reserve.
_______ are used to raise funds for projects that will
generate revenues that contribute to payment of interest
and repayment of debt. - ...ANSWER... ✔ ✔Revenue
bonds
, 4|Page
__________ are backed by government's ability to tax
its citizens. - ...ANSWER... ✔ ✔General obligation
bonds
A trustee guarantees that: - ...ANSWER... ✔ ✔the
terms of the bond indenture are carried out.
A trustee represents the: - ...ANSWER... ✔
✔bondholders
Most corporate bonds contain a call provision, which
gives the issuing firm the right to: - ...ANSWER... ✔
✔call in the bonds for redemption.
A provision that facilitates the orderly retirement of a
bond issue is a: - ...ANSWER... ✔ ✔sinking fund
A firm has the right to handle a sinking fund by
randomly calling for redemption a certain percentage
of the bonds each year at _________ value -
...ANSWER... ✔ ✔par
