1-U.S. Treasury securities with maturity of 2 years or more make two payments per year and one large payment at maturity. This is an example of a(n)
perpetuity. |
||
equity security. |
||
fixed payment security. |
||
discount bond. |
||
coupon bond. |
2-Sally purchases a security that matures in two years and makes no payments until maturity. This is an example of a(n)
fixed payment security. |
||
perpetuity. |
||
coupon bond. |
||
discount bond. |
||
equity security. |
3-Austin purchases a Subaru WRX and finances it at the dealer. He agrees to pay $450 every month for 5 years to pay for the car. This is an example of a(n)
perpetuity. |
||
equity security. |
||
discount bond. |
||
fixed payment security. |
||
coupon bond. |
(1) Equity Security
An equity security pays a fixed payments during the asset-holding period and another pre-determined fixed amount at the end of asset-holding period.
(2) Discount Bond
A discount bond is sold at a price that is lower than its face value, pays no interest or coupon during asset-holding period and the face value is paid at redemption.
(3) Fixed Payment security
With this type of securities, a fixed payment is made throughout the term of asset-holding (or repayment period).
Get Answers For Free
Most questions answered within 1 hours.