The coupon rate never changes. Principal adjusts with inflation and deflation, so the dollar payment varies.
The method for this kind of question
Term + payment form names the instrument.
Now answer
1 question on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.
Question 1Above the exam
A corporation issues $50,000 of unsecured, 200-day commercial paper to fund inventory, and a customer separately holds $300,000 in a single ownership category at one FDIC-insured domestic bank, split across two CDs. Is the commercial paper exempt from Securities Act registration, and how much of the customer's CD balance is FDIC-insured?
How sure are you?
Correct: A. The Securities Act Section 3(a)(3) exemption turns on current-transaction purpose and a 9-month (270-day) maximum maturity, which 200 days satisfies, not on a dollar cap; FDIC insurance is capped at $250,000 per depositor, per bank, per ownership category, so $50,000 of the $300,000 in one category at one bank is uninsured.
B. No $10,000,000 threshold governs the commercial-paper exemption, and FDIC coverage is capped at $250,000 per ownership category, not unlimited.
C. 200 days is well within the 270-day convention (itself inside the 9-month statutory limit), so the paper remains exempt.
D. Splitting one ownership category's funds across two CDs at the same bank does not raise the $250,000 cap; a different ownership category or a different bank would be needed.