Fin 881 Practice Exam Questions And Answers Guaranteed Solutions.
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Course
FIN.
Institution
FIN.
Classify each of the following in terms of their effect on interest rates:
1. Covenants on borrowing become more restrictive
2. Fed increases money supply
3. Total household wealth increases - correct answer 1,2,3 decreases
an investor wants to buy 4% more...
Classify each of the following in terms of their effect on interest rates:
1. Covenants on borrowing become more restrictive
2. Fed increases money supply
3. Total household wealth increases - correct answer 1,2,3 decreases
an investor wants to buy 4% more goods and services in the future in order to induce her to invest
today. During the investment period prices are expected to rise by 2%. Which statements are true?
1. 4% is desired rfr
2. 6% is nominal rate of interest required
3. 2% is the expected inflation rate over the period - correct answer n-i=r
n-2=4
6=n
you want to have $5mil when you retire in 40 years. You believe you earn 9% per year on your
investment. How much must u invest each year to achieve your goal when you retire? - correct answer
N=40
i=9
PV=0
PMT=?
FV=5mil
14,798
According to the liquidity premium theory of interest rates, - correct answer long-
term spot rates are higher than the average of current and expected future ST interest rates
suppose that the ytm of a 5 year treasury is 2.55% and the ytm of a 4 year treasury is 2.65%. What is the
one year forward rate of return? - correct answer [(1+.0255)^5)/(1+.0265)^4)]-
1=2.15%
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