100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
D076 Unit 3 WRITTEN EXAM PASSED £7.99   Add to cart

Exam (elaborations)

D076 Unit 3 WRITTEN EXAM PASSED

 1 view  0 purchase
  • Institution
  • AQA

What is the term for the percentage of the principal that a lender charges a borrower for the use of assets? - Interest rate How is the interest rate expressed? - as a percentage What is the main purpose of charging interest? - It allows borrowers to pay to use the assets of another entity to a...

[Show more]

Preview 2 out of 5  pages

  • February 3, 2024
  • 5
  • 2023/2024
  • Exam (elaborations)
  • Unknown
All documents for this subject (128)
avatar-seller
jessyqueen
D076 Unit 3 WRITTEN EXAM PASSED
What is the term for the percentage of the principal that a lender charges a borrower for the use of
assets? - ✔✔✔Interest rate



How is the interest rate expressed? - ✔✔✔as a percentage



What is the main purpose of charging interest? - ✔✔✔It allows borrowers to pay to use the assets of
another entity to accomplish their own goals.



What is a component of the required rate of return? - ✔✔✔Opportunity cost



Why would a long-term investment require a higher rate of return? - ✔✔✔There is greater risk
involved and a higher opportunity cost.



You just inherited $25,000 from a long-lost relative. You decide to put the money in a savings account
for the time being. What would be considered an opportunity cost of putting the money in savings? - ✔
✔✔Buying a brand new car



Today, he pulled out $15,000 from his account to buy the car, but the price of the car is now $16,562.
Which component of the required rate of return did Ahmed forget to consider? - ✔✔✔Inflation



Why is built-in inflation linked to adaptive expectations? - ✔✔✔Workers want higher wages to keep
their standard of living as prices increase, which pushes the prices even higher.



What is the compensation for risk given to investors called? - ✔✔✔Risk Premium



Which type of interest rate is the rate at which invested money grows for a certain period time? - ✔✔
✔Nominal Rate

, Which component of an interest rate is an indicator of inflation and opportunity cost? - ✔✔✔Risk Free
Rate



What is the name for the interest rate expressed on an annual basis? - ✔✔✔Annual percentage rate



Why is the required rate of return also known as the hurdle rate? - ✔✔✔It is the minimum rate that a
firm must surpass to accept a project.



What is the inflation rate? - ✔✔✔The rate at which the average price level of a basket of goods and
services in an economy increases



What does the risk-free rate indicate? - ✔✔✔Inflation and opportunity cost



Suppose Sophia is considering a new stock investment for her retirement account. This stock has
significant risk, but is quite popular in the market. Inflation for the next few years is expected to be 2-3%
per year, and the current U.S. Treasury rates are about 2%. How should she use this information to
decide what type of return she can expect from the stock? - ✔✔✔Based on the inflation rate, she
should expect this stock to provide a return higher than this for the associated risk.



What is the name for a series of equal payments made at the end of consecutive periods over a fixed
length of time? - ✔✔✔Ordinary annuity



If you invest $10,000 today and then $5,000 each year for the next 5 years into an investment with an
interest rate of 4%, you can withdraw $39,248.14 in 5 years. What does $39,248.14 represent? - ✔✔✔
Future value



What is the name for the concept that a dollar today is worth more than a dollar in the future? - ✔✔✔
Time Value Money

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller jessyqueen. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £7.99. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

73918 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£7.99
  • (0)
  Add to cart