QUESTION 3 Use the table for the question(s) below. Consider the following investment alternatives: Investment Rate Compounding 6.25% Annual B 6.10% Daily C 6.125 Quarterly D 6.120 Monthly Which alternative offers you the highest effective rate of return? Investment A Investment B O Investment Investment D QUESTION 4 Use the table for the question(s) below. Consider the following investment alternatives: Investment Rate Compounding 6.25% Annual B 6.10% Daily 6.125 Quarterly D 6.120 Monthly closest to: The highest effective rate of return you could earn on any of these investments 6.295% O 6.250% O 6.267% 6.310% QUESTION 8 Which of the following statements is FALSE? O Real interest rates indicate the rate at which your money will grow if invested for a certain period. The relationship between the investment term and the interest rate is called the term structure of interest rates. The shape of the yield curve will be strongly influenced by interest rate expectations, The yield curve is a potential leading indicator of future economic growth. QUESTION 9 If the current inflation rate is 2.2% and you are earning a real rate of return on investment of 3.8%, then the nominal rate on this investment is closest to (please using the formula; NOT the approximation): O 6.2% O 6.08% O 6.0% O 6.8% QUESTION 10 Use the table for the question(s) below. Suppose the term structure of interest rates is shown below: 20 years Term 1 year 2 years 3 years 5 years 10 years Rate (EAR%) 5.00% 4.80% 4.60% 4.50% 4.25% 4.15% What is the shape of the yield curve and what expectations are investors likely to have about future interest rates? O Inverted; Higher Inverted; Lower O Normal; Higher O Normal; Lower