Financial Management - Study Mode

[#366] Bond's promised rate of return is also considered as
Correct Answer

(C) yield to maturity

Explanation

Solution: Bond's promised rate of return is also considered as yield to maturity. Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. Yield to maturity is considered a long-term bond yield but it is expressed as an annual rate.

[#367] A premium which reflects possibility of issuer who does not pay principal amount of bonds is called
Correct Answer

(C) default risk premium

Explanation

Solution: A premium which reflects possibility of issuer who does not pay principal amount of bonds is called default risk premium. A default risk premium is effectively the difference between a debt instrument's interest rate and the risk-free rate.

[#368] Corporations such as Citigroup, American Express and Fidelity are classified as
Correct Answer

(A) financial services corporations

Explanation

Solution: Corporations such as Citigroup, American Express and Fidelity are classified as financial services corporations. Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.

[#369] Financial corporations which serve individual savers and commercial mortgage borrowers are classified as
Correct Answer

(D) savings and loans associations

Explanation

Solution: Financial corporations which serve individual savers and commercial mortgage borrowers are classified as savings and loans associations. Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.

[#370] A regulatory body which licenses brokers and oversees traders is classified as
Correct Answer

(D) national association of securities dealers

Explanation

Solution: A regulatory body which licenses brokers and oversees traders is classified as national association of securities dealers. A regulatory body is like a professional body but it is not a membership organisation and its primary activity is to protect the public.