Question: Which statement is false? A. The real interest rate is not part of the risk-free rate. B. Present value increases as the discount rate decreases.

Which statement is false?

  • A. The real interest rate is not part of the risk-free rate.
  • B. Present value increases as the discount rate decreases.
  • C. The future value of an annuity due would be less than the future value of an otherwise identical ordinary annuity.
  • D. The price and yield to maturity of a bond are inversely related.

Which of the following interest rates would have a high illiquidity premium?

  • A. the rate of a credit card
  • B. the rate on a home mortgage loan
  • C. the rate on a federally-backed student loan
  • D. All of the above would have a high illiquidity premium.

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