The future value of a lump sum at the end of five years is $1,000. Th

1.Which of the following statements is most correct? ( )选项： A:A 5-year $100 annuity due will have a higher present value than a 5-year $100 ordinary annuity. B:A 15-year mortgage will have larger monthly payments than a 30-year mortgage of the same amount and same interest rate. C:If an investment pays 10 percent interest compounded annually, its effective rate will also be 10 percent. D:Statements a and c are correct. E:All of the statements above are correct.

2.If a country experienced deflation, then ( ) 选项： A、the nominal interest rate would be greater than the real interest rate. B、the real interest rate would be greater than the nominal interest rate. C、the real interest rate would equal the nominal interest rate. D、None of the above is necessarily correct.

3.If a country experienced deflation, then ( )选项： A:the nominal interest rate would be greater than the real interest rate.; B:the real interest rate would be greater than the nominal interest rate.; C:the real interest rate would equal the nominal interest rate.; D:None of the above is necessarily correct.

4.Which one of the following statements concerning interest rates is correct?选项： A:Savers would prefer annual compounding over monthly compounding.; B:The effective annual rate decreases as the number of compounding periods per year increases.; C:Borrowers would prefer monthly compounding over annual compounding.; D:The effective annual rate equals the annual percentage rate when interest is compounded annually.

5.Suppose the nominal interest rate is 10 percent, the tax rate on interest income is 28 percent, and the inflation rate is 6 percent. Then the after-tax real interest rate is -3.2 percent.选项： A:正确; B:错误

6.Sara is investing $1,000 today. Which one of the following will increase the future value of that amount? 选项： A、Shortening the investment time period B、Paying interest only on the principal amount C、Paying simple interest rather than compound interest D、Paying interest only at the end of the investment period rather than throughout the investment period E、Increasing the interest rate

7.If the nominal interest rate is 5 percent and the rate of inflation is -2.5 percent, then the real interest rate is选项： A:-7.5 percent. B: -2.5 percent. C:2.5 percent. D:7.5 percent.

8. Whenever the expected inflation rate is positive （）选项： A:the real interest rate is greater than the nominal interest rate. B:the real interest rate is negative. C:the real interest rate is positive. D:the nominal interest rate must be equal to the real interest rate. E:none of the above

9.Given a nominal interest rate of 6 percent, in which of the following cases would you earn the lowest after-tax real rate ofinterest?选项： A:Inflation is 4 percent; the tax rate is 5 percent. B:Inflation is 3 percent; the tax rate is 20 percent. C:Inflation is 2 percent; the tax rate is 30 percent. D:The after-tax real interest rate is the same for all of the above.

10.When a company sells its bonds at less than face value, the effective interest rate is 选项： A、lower than the yield rate. B、higher than the contract interest rate. C、lower than the nominal rate D、higher than the market interest rate

11.Anna pays .85 percent interest monthly on her credit card account. When the interest rate on that debt is expressed as if it were compounded annually, the rate would be referred to as the: 选项： A、annual percentage rate. B、simplified rate. C、quoted rate. D、stated rate. E、effective annual rate.

12.If the nominal rate of interest is 2 percent, and the expected inflation rate is -10 percent, the real rate of interest is 选项：A、 2 percent.B、 8 percent.C、 10 percent.D、 12 percent.

13.Which of the following is true about perpetuities? 选项： A、All else equal, the present value of a perpetuity is higher when the periodic cash flow is higher. B、All else equal, the present value of a perpetuity is higher when the interest rate is lower. C、 If two perpetuities have the same present value and the same interest rate, they must have the same cash flows. D、All of the above are true statements.

14.A monthly interest rate expressed as an annual rate would be an example of which one of the following rates?选项： A:stated rate; B:discounted annual rate; C:effective annual rate; D:periodic monthly rate

15.A monthly interest rate expressed as an annual rate would be an example of which one of the following rates? 选项： A、stated rate B、discounted annual rate C、effective annual rate D、periodic monthly rate

16.For this question, assume that expected inflation is equal to the nominal interest rate. In this situation, which of the following is correct? 选项： A: The real interest rate is negative. B: The real interest rate is positive. C: The real interest rate is higher than the nominal interest rate. D: The real interest rate is zero.

17.You put money into an account that earns a 5 percent nominal interest rate. The inflation rate is 2 percent, and your marginal tax rate is 20 percent. What is your after-tax real rate of interest?( ) 选项： A、3.6 percent. B、2.4 percent. C、2.0 percent. D、4.4 percent.

18.Four years ago, Saul invested $500. Three years ago, Trek invested $600. Today, these two investments are each worth $800. Assume each account continues to earn its respective rate of return. Which one of the following statements is correct concerning these investments? 选项： A:Three years from today, Trek's investment will be worth more than Saul's. B:One year ago, Saul's investment was worth less than Trek's investment. C:Trek earns a higher rate of return than Saul. D:Trek has earned an average annual interest rate of 9.86 percent. E:Saul has earned an average annual interest rate of 12.64 percent. F:Analytical Thinking

19.If a lender wants a real return of 6 percent and she expects inflation to be 4 percent, which of the following is the nominal interest rate to charge? ( )选项： A:4 percent.; B:6 percent.; C:2 percent.; D:10 percent.

20.Which of the following statements is FALSE about interest rates?选项： A:As interest rates may be quoted for different time intervals, it is often necessary to adjust the interest rate to a time period that matches that of cash flows.; B: The effective annual rate indicates the amount of interest that will be earned at the end of one year.; C: The annual percentage rate indicates the amount of simple interest earned in one year.; D: The annual percentage rate indicates the amount of interest including the effect of compounding.

21.Which of the following statements is/are correct?Statement I. If a bond's coupon rate is greater than its YTM, its price will be at a premium to par value.Statement II. The percentage decrease in value when the YTM increases by a given amount is smaller than the increase in value when the YTM decreases by the same amount. 选项： A: Both statements are correct. B: Both statements are incorrect. C: Only one statement is correct.

22.There are two bonds with the same face value $1,000. One maturity is three years, while the other one is 5 years. Both bonds have the annual coupon payments $50. Which of the following statement is NOT correct? 选项： A: For both bonds, higher interest rates cause the bond to sell for a discount.; B:For both bonds, lower interest rates cause the bond to sell for a premium.; C:When the interest rate increases, the price of the 5-year bond is higher than the price of the 3-year bond.; D:When the interest rate decreases, the increase of prices is greater for the 5-year bond than for the 3-year bond.

23.If there is a surplus of loanable funds, the quantity demanded is选项： A:greater than the quantity supplied and the interest rate will rise.; B:greater than the quantity supplied and the interest rate will fall.; C:less than the quantity supplied and the interest rate will rise.; D:less than the quantity supplied and the interest rate will fall.

24.This afternoon, you deposited $1,000 into a retirement savings account. The account will compound interest at 6 percent annually. You will not withdraw any principal or interest until you retire in forty years. Which one of the following statements is correct?选项： A:The interest you earn six years from now will equal the interest you earn ten years from now.; B:The interest amount you earn will double in value every year.; C:The total amount of interest you will earn will equal $1,000 × .06 × 40.; D:The present value of this investment is equal to $1,000.