BEC Financial Management review 4

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Joens1313
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300128
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BEC Financial Management review 4
Updated:
2015-04-06 23:32:46
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BEC Financial Management review
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BEC Financial Management review 4
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  1. What is the risk premium?
    The risk premium generally is considered to be the sum of the default risk premium and the maturity risk premium.
  2. What is an annuity?
    • An annuity is a series of payments of a fixed
    • amount for a specified number of years.
  3. What is an ordinary annuity?
    • The payment occurs at the end of the year (in
    • arrears)
  4. What is an annuity due?
    • The payment is made at the beginning of the
    • year.
  5. In terms of an annuity, what does perpetuity
    mean?
    • A perpetuity is a special instance of annuity in
    • which a annuity continues infinitely.
  6. Bonds represent the right to receive any
    ------------------------------ specified in the bond and the return of
    principal upon maturity.
    • Bonds represent the right to receive any
    • interest payments specified in the bond and the return of principal upon
    • maturity.
  7. -------------- represent the right to receive
    any interest payments specified in the bond and the return of principal upon
    maturity.
    • Bonds represent the right to receive any
    • interest payments specified in the bond and the return of principal upon
    • maturity.
  8. What is the bonds stated face value called?
    Par value
  9. The bonds stated par value is to be repaid at a
    specified future date, called a maturity date.
    The bonds stated par value is to be repaid at a specified future date, called a ------------------------------
  10. What is the bonds coupon interest rate?
    • The rate the issuer uses to calculate the
    • interest payments of a bond.
  11. The coupon interest rate, or stated interest
    rate, is the rate the issuer uses to calculate the interest payments for a
    bond.
    • The ----------------------, or stated interest
    • rate, is the rate the issuer uses to calculate the interest payments for a
    • bond.

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