Question

Which one of the following terms is defined as a loan wherein the regular payments, including...

Which one of the following terms is defined as a loan wherein the regular payments, including both interest and principal amounts, are insufficient to retire the entire loan amount, which then must be repaid in one lump sum?

amortized loan

continuing loan

balloon loan

remainder loan

upside down loan

A bond has a market price that exceeds its face value. Which of the following features currently apply to this bond?

I. discounted price
II. premium price
III. yield-to-maturity that exceeds the coupon rate
IV. yield-to-maturity that is less than the coupon rate

III only

I and III only

I and IV only

II and III only

II and IV only
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Homework Answers

Answer #1

Baloon Loan is defined as a loan wherein the regular payments, including both interest and principal amounts, are insufficient to retire the entire loan amount, which then must be repaid in one lump sum.

option 3 is correct.

When the Value of Bond is more than the Face value of the Bond then Bond is at a premium and the TYM has be less than the Coupon Rate.

Therefore, Statement II and IV are only correct.

Option 5 is correct. II and IV only.

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