QUESTION 1 What is default risk? The risk that a bond or other debt instrument will make the promised payments. The risk that a bond or other debt instrument will avoid the promised payments. The risk that a stock or other equity instrument will not make the promised payments. The risk that a bond or other debt instrument will not make the promised payments.

QUESTION 2 What are debt instruments? Stocks Bonds Forwards contracts Swaps

QUESTION 3 What is interest rate risk? The risk that the market price of a bond or other debt instrument will increase due to increases in the interest rate. The risk that the market price of a bond or other debt instrument will decrease due to increases in the interest rate. The risk that the market price of a bond or other debt instrument will increase due to no changing in the interest rate. The risk that the market price of a bond or other debt instrument will decrease due to increases in the exchange rate

QUESTION 4 What is a consol? A type of periodic bond A type of perpetual bond A type of 1-year bond A type of 10-year bond

QUESTION 5 "When calculating mortgages, do banks use simple or compounding method?" Simple interest method Compounding interest method

QUESTION 6 What is a simple loan? A debt instrument where the borrower repays only the principal A debt instrument where the borrower repays the principal and interest at the beginning of the loan. A debt instrument where the borrower repays the principal and interest at the end of the loan. A debt instrument where the borrower repays only the interest 5 points

QUESTION 7 What is a discount bond? A debt instrument that makes many payments before maturity A debt instrument that makes only one payment at maturity A debt instrument that does not require any payments A debt instrument that makes many payments during and after maturity 5 points

QUESTION 8 What is a coupon bond? "A debt instrument that makes interest payments periodically until its maturity or redemption date, when the final interest payment and the principal are to be paid." "A debt instrument that makes one interest payments until its maturity or redemption date, when the final interest payment and the principal are to be paid." "An equity instrument that makes interest payments periodically until its maturity or redemption date, when the final interest payment and the principal are to be paid." "An equity instrument that makes one interest payments until its maturity or redemption date, when the final interest payment and the principal are to be paid." 5 points

QUESTION 9 What is economic growth? Increases of Real GDP per capita Increases of Nominal GDP per capita Increases of Real GDP Increases of Nominal GDP 5 points

QUESTION 10 What is the return in an investment? A measure of the profitability of an investment that takes into account changes in the value of the bond or other asset. A measure of the losses of an investment that takes into account changes in the value of the bond or other asset. A measure of the profitability of an investment that takes into account changes in economic growth in our country A measure of the profitability of an investment that takes into account changes in the value of liabilities 5 points

QUESTION 11 What is a coupon payment? Interest rate promised to owner of a coupon bond Interest rate promised to owner of a mortgage holder Interest rate promised to owner of stockholders Interest rate promised to owner of property 5 points

QUESTION 12 What are real interest rates? "The price of borrowing money as it is usually stated, adjusted for inflation. " "The price of borrowing money as it is usually stated, unadjusted for inflation. " "The price of borrowing money as it is usually stated, unadjusted for interest rates " "The price of borrowing money as it is usually stated, adjusted for interest rates" 5 points

QUESTION 13 What are interest rates? The opportunity cost of money The total cost of money The potential profit of money The opportunity cost of our actions 5 points

QUESTION 14 What is Present value? Value of money tomorrow Value of period payments tomorrow Value of period payments today Value of money today 5 points

QUESTION 15 What are nominal interest rates? "The price of borrowing money as it is usually stated, adjusted for inflation." "The price of borrowing money as it is usually stated, unadjusted for inflation. " "The price of borrowing money as it is usually stated, unadjusted for interest rates " "The price of borrowing money as it is usually stated, adjusted for interest rates" 5 points

QUESTION 16 What is Yield to maturity? A method to measure growth rates A method to measure unemployment rates A method to measure inflation rates A method to measure interest rates 5 points

QUESTION 17 What is inflation? A aggressive increase of price level A steady flow in the price level or average prices. A sustained decrease in the price level or average prices. A sustained increase in the price level or average prices. 5 points

QUESTION 18 What is the current yield formula? FV+PV=i FV-PV=i FV/PV=I FV*PV=i 5 points

QUESTION 19 What is Future value? Value of period payments tomorrow Value of money tomorrow Value of period payments today Value of money today 5 points

QUESTION 20 What is a fixed-payment loan? A debt instrument where the borrower makes periodic repayments of principal A debt instrument in which the borrower makes periodic repayments of principal and interest. A debt instrument where the borrower makes periodic repayments of interest A debt instrument where the borrower makes one payment of principal and interest at the end