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Pearson Assignment 3 Question and answers already passed 2023
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Pearson Assignment 3 Question and answers already passed 2023
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Pearson Assignment 3Longer the maturity of a Treasury security, the smaller the interest rate risk.
T/F - correct answer false
Nominal rate of interest is equal to the sum of the real rate of interest plus an inflation
premium plus a risk premium.
T/F - correct answer True
The nominal rate of interest is the actual rate of interest charged by the supplier of funds
and paid by demander.
T/F - correct answer True
The reason for a difference in the yield between a Aaa corporate bond and an otherwise
identical Baa bond is the risk premium; other things being equal.
T/F - correct answer True
________ rate of interest creates equilibrium between the supply of savings and the
demand for investment funds. - correct answer real
The ________ is the compound annual rate of interest earned on a debt security
purchased on a given date and held to maturity. - correct answer yield to maturity
The bond indenture identifies any collateral pledged against a bond and specifies how it
is to be maintained.
T/F - correct answer true
The legal contract setting forth the terms and provisions of a corporate bond is a(n)
________. - correct answer indenture
An example of a standard debt provision is to ________. - correct answer pay taxes
and other liabilities when due
To compensate for the uncertainty of future interest rates and the fact that the longer
the term of a loan the higher the probability that the borrower will default, the lender
typically ________. - correct answer charges a higher interest rate on longminus−term
loans
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