Finance Q2

What is the amount of money borrowed or invested in a loan agreement called?

• Interest rate

• Principal

• Collateral

• Dividend

Which term refers to the date when a loan must be fully paid?

• Grace period

• Maturity date

• Discount date

• Issue date

What do we call the extra time given before repayment starts?

• Penalty period

• Grace period

• Holding period

• Credit term

The face value of a bond is the same as its:

• Market price

• Nominal value

• Discount value

• Amortized cost

What are the periodic interest payments received by a bondholder called?

• Coupons or annuities

• Discounts

• Premiums

• Accruals

When a bond is issued below face value, it is said to be issued at:

• Premium

• Par

• Discount

• Market value

The effective rate of interest is also called the:

• Nominal rate

• Stated rate

• Market rate

• Annual rate

When bonds are issued at a premium, it means the:

• Market rate is higher than the nominal rate

• Nominal rate is higher than the market rate

• Both rates are equal

• No interest is charged

The amortization method that produces equal amounts each period is called:

• Effective interest method

• Straight-line method

• Double-declining method

• Simple interest method

In the effective interest method, the periodic interest expense is based on:

• Constant peso amount

• Constant percentage of carrying value

• Fixed nominal interest

• Total cash payments