货币金融学chapter4英文习题0001
货币金融学习题
货币金融学习题Chapter 1 Why Study Money, Banking, and Financial Markets? 1.1 Why Study Financial Markets?1) Financial markets promote economic efficiency by A) channeling funds from investors to savers. B) creating inflation.C) channeling funds from savers to investors. D) reducing investment. Answer: C Ques Status: Revised2)Financial markets promote greater economic efficiency by channelingfunds from ________ to ________. A) investors; savers B) borrowers; savers C) savers; borrowers D) savers; lendersAnswer: C Ques Status: New3) Well-functioning financial markets promote A) inflation. B) deflation.C) unemployment. D) growth.Answer: D Ques Status: Revised4)Markets in which funds are transferred from those who have excess funds available to thosewho have a shortage of available funds are called A) commodity markets. B) fund-available markets. C) derivative exchange markets. D) financial markets.Answer: D Ques Status: Previous Edition5)________ markets transfer funds from people who have an excess of available funds to people who have a shortage. A) Commodity B) Fund-available C) FinancialD) Derivative exchange Answer: C Ques Status: New6) Poorly performing financial markets can be the cause of A) wealth. B) poverty. C) financial stability. D) financial expansion. Answer: B Ques Status: Revised7) The bond markets are important because they areA)easily the most widely followed financial markets in the United States.B) the markets where foreign exchange rates are determined. C) the markets where interest rates are determined. D) the markets where all borrowers get their funds. Answer: C Ques Status: Revised8)The price paid for the rental of borrowed funds (usually expressed as a percentage of therental of $100 per year) is commonly referred to as the A) inflation rate.B) exchange rate. C) interest rate. D) aggregate price level.Answer: C Ques Status: Previous Edition9)Compared to interest rates on long-term U.S. government bonds, interest rates onthree-month Treasury bills fluctuate ________ and are ________ on average.A) more; lower B) less; lower C) more; higher D) less; higherAnswer: A Ques Status: Previous Edition10)The interest rate on Baa (medium quality) corporate bonds is ________, on average, than otherinterest rates, and the spread between it and other rates became ________ in the 1970s. A) lower; smaller B) lower; larger C) higher; smaller D) higher; largerAnswer: D Ques Status: Previous Edition11)Everything else held constant, a decline in interest rates will cause spending on housing to A) fall.B) remain unchanged.C) either rise, fall, or remain the same. D) rise.Answer: D Ques Status: Revised12)An increase in interest rates might ________ saving because more can be earned in interest income. A) encourage B) discourage C) disallow D)invalidateAnswer: A Ques Status: New13)Everything else held constant, an increase in interest rates on student loansA) increases the cost of a college education. B) reduces the cost of a college education. C) has no effect on educational costs. D) increases costs for students with no loans. Answer: A Ques Status: Revised14)High interest rates might cause a corporation to ________ building a new plant that would provide more jobs. A) complete B) considerC) postpone D) contemplateAnswer: C Ques Status: New15) The stock market is important because it is A) where interest rates are determined.B) the most widely followed financial market in the United States. C) where foreign exchange rates are determined. D) the market where most borrowers get their funds. Answer: B Ques Status: Revised16) Stock prices since the 1950s have beenA) relatively stable trending upward at a steady pace. B) relatively stable trending downward at a moderate rate. C) extremely volatile.D) unstable trending downward at a moderate rate. Answer: C Ques Status: Previous Edition17) A rising stock market index due to higher share prices A) increases people?s wealth, but is unlikely to increase their willingness to spend. B) increases people?s wealth and as a result may increase their willingness to spend. C) decreases the amount of funds that business firms can raise by selling newly-issued stock. D) decreases people?s wealth, but is unlikely to increase their willingness to spend. Answer: B Ques Status: Revised 18) When stock prices fall A) an individual?s wealth is not affected nor is their willingness to spend.B)a business firm will be more likely to sell stock to finance investment spending. C) an individual?s wealth may decrease but their willingness to spend is not affected. D) an individual?s wealth may decrease and their willingness to spend may decrease. Answer: D Ques Status: New 19) Changes in stock pricesA) do not affect people?s wealth and their willingness to spend B) affect firms? decisions to sell stock to finance investment spending. C) occur in regular patterns.D) are unimportant to decision makers. Answer: B Ques Status: Revised20) An increase in stock prices ________ the size of people?s wealth and may ________ theirwillingness to spend, everything else held constant. A) increases; increase B) increases; decrease C) decreases; increase D) decreases; decreaseAnswer: A Ques Status: New21)Fear of a major recession causes stock prices to fall, everything else held constant, which in turn causes consumer spending to A) increase.B) remain unchanged. C) decrease.D) cannot be determined. Answer: C Ques Status: Revised22) A common stock is a claim on a corporation?s A) debt. B) liabilities.C) expenses.D) earnings and assets. Answer: D Ques Status: Revised23)On ________, October 19, 1987, the market experienced its worst one-day drop in its entirehistory with the DIJA falling by more than 500 points. A) ?Terrible Tuesday? B) ?Woeful Wednesday? C) ?Freaky Friday? D) ?Black Monday? Answer: D Ques Status: New24) The decline in stock prices from 2000 through 2002 A) increased individuals? willingness to spend. B) had no effect on individual spending. C) reduced individuals? willingness to spend. D) increased individual wealth. Answer: C Ques Status: Revised25)The Dow reached a peak of over 11,000 before the collapse of the________ bubble in 2000. A) housingB) manufacturing C) high-tech D) bankingAnswer: C Ques Status: New26) The price of one country?s currency in terms of another country?s currency is called the A) exchange rate. B) interest rate.C) Dow Jones industrial average. D) prime rate.Answer: A Ques Status: Revised27)The market where one currency is converted into another currency is called the ________ market. A) stock B) bond C) derivatives D) foreign exchange Answer: D Ques Status: New28) Everything else constant, a stronger dollar will mean thatA) vacationing in England becomes more expensive. B) vacationing in England becomes less expensive. C) French cheese becomes more expensive. D) Japanese cars become more expensive. Answer: B Ques Status: Previous Edition29)Which of the following is most likely to result from a stronger dollar?A)U.S. goods exported aboard will cost less in foreign countries, and so foreigners will buy more of them.B)U.S. goods exported aboard will cost more in foreign countries and so foreigners will buy more of them.C)U.S. goods exported abroad will cost more in foreign countries, and so foreigners will buy fewer of them.D) Americans will purchase fewer foreign goods. Answer: C Ques Status: Previous Edition30) Everything else held constant, a weaker dollar will likely hurt A) textile exporters in South Carolina.B) wheat farmers in Montana that sell domestically.C)automobile manufacturers in Michigan that use domestically produced inputs.D) furniture importers in California. Answer: D Ques Status: Revised31)Everything else held constant, a stronger dollar benefits ________ and hurts ________.A) American businesses; American consumers B) American businesses; foreign businesses C) American consumers; American businesses D) foreign businesses; American consumers Answer: C Ques Status: Study Guide32)From 1980 to early 1985 the dollar ________ in value, therebybenefiting American ________. A) appreciated; consumers B) appreciated, businesses C) depreciated; consumers D) depreciated, businessesAnswer: A Ques Status: Previous Edition33)From 1980 to 1985 the dollar appreciated relative to the British pound. Holding everything elseconstant, one would expect that, when compared to 1980, A) fewer Britons traveled to the United States in 1985. B) Britons imported more wine from California in 1985. C) Americans exported more wheat to England in 1985. D) more Britons traveled to the United States in 1985. Answer: A Ques Status: Previous Edition34)When in 1985 a British pound cost approximately $1.30, a Shetland sweater that cost 100British pounds would have cost $130. With a weaker dollar, the same Shetland sweater would have cost A) less than $130.B) more than $130.C)$130, since the exchange rate does not affect the prices that American consumers pay for foreign goods.D)$130, since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar. Answer: B Ques Status: Previous Edition35)Everything else held constant, a decrease in the value of the dollar relative to all foreigncurrencies means that the price of foreign goods purchased by Americans A) increases B) decreases. C) remains unchanged.D) either increases, decreases, or remains unchanged. Answer: A Ques Status: Revised36) American farmers who sell beef to Europe benefit most from A) a decrease in the dollar price of euros. B) an increase in the dollar price of euros. C) a constant dollar price for euros.D) a European ban on imports of American beef. Answer: B Ques Status: Revised37)If the price of a euro (the European currency) increases from $1.00 to $1.10, then, everything else held constant, A) a European vacation becomes less expensive. B) a European vacation becomes more expensive. C) the cost of a European vacation is not affected. D) foreign travel becomes impossible. Answer: B Ques Status: Revised38)Everything else held constant, Americans who love French wine benefit most fromA) a decrease in the dollar price of euros. B) an increase in the dollar price of euros. C) a constant dollar price for euros. D) a ban on imports from Europe. Answer: A Ques Status: Revised39) What is a stock? How do stocks affect the economy? Answer:A stock represents a share of ownership of a corporation, or a claim on a firm?searnings/assets. Stocks are part of wealth, and changes in their value affect people?swillingness to spend. Changes in stock prices affect a firm?s ability to raise funds, and thus their investment. Ques Status: Previous Edition1.2 Why Study Banking and Financial Institutions?1)Channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower?s security is known as A) barter.B) redistribution.C) financial intermediation. D) taxation.Answer: C Ques Status: Revised2)Banks are important to the study of money and the economy because theyA) channel funds from investors to savers. B) have been a source of rapid financial innovation.C) are the only important financial institution in the U.S. economy. D) create inflation.Answer: B Ques Status: Revised3)Economists group commercial banks, savings and loan associations, credit unions, mutualfunds, mutual savings banks, insurance companies, pension funds, and finance companiestogether under the heading financial intermediaries. Financial intermediariesA)provide a channel for linking those who want to save with those who want to invest.B) produce nothing of value and are therefore a drain on society?s resources.C) can hurt the performance of the economy. D) hold very little of the average American?s wealth. Answer: A Ques Status: Revised4)Banks, savings and loan associations, mutual savings banks, and credit unionsA) are no longer important players in financial intermediation. B) since deregulation now provide services only to small depositors. C)have been adept at innovating in response to changes in the regulatory environment.D) produce nothing of value and are therefore a drain on society?s resources.Answer: C Ques Status: Revised5)Banks and other financial institutions engage in financial intermediation, whichA) can hurt the performance of the economy. B) can benefit economic performance. C) has no effect on economic performance.D) involves borrowing from investors and lending to savers. Answer: B Ques Status: Revised6)Financial institutions that accept deposits and make loans are called________. A) exchanges B) banksC) over-the-counter markets D) finance companies Answer: B Ques Status: New7)The financial intermediaries that the average person interacts with most frequently are ________.A) exchanges B) over-the-counter markets C) finance companiesD) banksAnswer: D Ques Status: New8) Which of the following is not a financial institution? A) a life insurance company B) a pension fund C) a credit union D) a business college Answer: D Ques Status: New9)The delivery of financial services electronically is called ________. A) e-business B) e-commerce C) e-finance D) e-possible Answer: C Ques Status: New1.3 Why Study Money and Monetary Policy? 1) Money is defined as A) bills of exchange.B)anything that is generally accepted in payment for goods and services or in the repayment of debt.C) a risk-free repository of spending power. D) the unrecognized liability of governments. Answer: B Ques Status: Previous Edition2)Evidence from the United States and other foreign countries indicates thatA)there is a strong positive association between inflation and growth rate of money over long periods of time. B) there is little support for the assertion that ?inflation is always and everywhere a monetary phenomenon.? C)countries with low monetary growth rates tend to experience higher rates of inflation, all else being constant. D) money growth is clearly unrelated to inflation. Answer: A Ques Status: Previous Edition3)The upward and downward movement of aggregate output produced in the economy is referred to as the ________. A) roller coaster B) see saw C) business cycle D) shock waveAnswer: C Ques Status: New4)Sustained downward movements in the business cycle are referred to as A) inflation. B) recessions.C) economic recoveries. D) expansions.Answer: B Ques Status: Previous Edition5) Prior to all recessions since 1900, there has been a drop in A) inflation. B) the money stock.C) the growth rate of the money stock. D) interest rates.Answer: C Ques Status: Revised6)Evidence from business cycle fluctuations in the United States indicates thatA)a negative relationship between money growth and general economicactivity exists.B)recessions have been preceded by declines in share prices on the stock exchange.C) recessions have been preceded by dollar depreciation.D)recessions have been preceded by a decline in the growth rate of money.Answer: D Ques Status: Previous Edition7)A sharp increase in the growth of the money supply is likely followed byA) a recession. B) a depression.C) an increase in the inflation rate. D) no change in the economy. Answer: C Ques Status: Revised 8) It is true that inflation is aA) continuous increase in the money supply. B) continuous fall in prices.C) decline in interest rates. D) continually rising price level. Answer: D Ques Status: Revised9)________ theory relates changes in the quantity of money to changes in aggregate economic activity and the price level. A) Monetary B) Fiscal C) Financial D) SystemicAnswer: A Ques Status: New10)The management of money and interest rates is called ________ policy and is conducted by a nation?s ________ bank. A) monetary; superior B) fiscal; superior C) fiscal; central D) monetary; central Answer: D Ques Status: New11)The organization responsible for the conduct of monetary policy in the United States is the A) Comptroller of the Currency. B) U.S. Treasury.C) Federal Reserve System. D) Bureau of Monetary Affairs. Answer: C Ques Status: Previous Edition 12) Which of the following is a true statement?A) Money or the money supply is defined as Federal Reserve notes. B)The average price of goods and services in an economy is called the aggregate price level.C)The inflation rate is measured as the rate of change in the federal government budget deficit.D)The aggregate price level is measured as the rate of change in the inflation rate.Answer: B Ques Status: Revised13)If ten years ago the prices of the items bought last month by the average consumer would havebeen much higher, then one can likely conclude thatA) the aggregate price level has declined during this ten-year period. B) the average inflation rate for this ten-year period has been positive. C)the average rate of money growth for this ten-year period has been positive.D) the aggregate price level has risen during this ten-year period. Answer: A Ques Status: Revised14)From 1950-2021 the price level in the United States increased more than ________. A) twofold B) threefold C) sixfold D) ninefoldAnswer: C Ques Status: New15)One likely explanation for the relatively high rates of inflation experienced in many Latin American countries is theA) relatively slow growth in the money supply in these countries. B) relatively rapid growth in the money supply in these countries. C) decline in the prices of basic commodities in these countries. D) budget surpluses maintained in these countries. Answer: B Ques Status: Revised16) Complete Milton Friedman?s famous statement, ?Inflation is always and everywhere a ________ phenomenon.? A) recessionary B) discretionary C) repressionary D) monetaryAnswer: D Ques Status: Previous Edition17) Countries that experience very high rates of inflation have A)balanced budgets.B) rapidly growing money supplies. C) falling money supplies. D) constant money supplies. Answer: B Ques Status: Revised18)________ policy involves decisions about government spending and taxation. A) Monetary B) Fiscal C) Financial D) SystemicAnswer: B Ques Status: New19)When tax revenues are greater than government expenditures, the government has a budget ________.感谢您的阅读，祝您生活愉快。
《货币金融学》英文版米什金第十一版最新题库及解析
Chapter 31. Money is____A____.A) anything that is generally accepted in payment for goods and services or in the repayment of debtB) a flow of earnings per unit of timeC) the total collection of pieces of property that are a store of valueD) always based on a precious metal like gold or silver2. A person's house is part of her ___D_____.A) money B) income C) liabilities D) wealth3. The difference between money and income is that____B____.A) money is a flow and income is a stock B) money is a stock and income is a flowC) there is no difference, money and income are both stocksD) there is no difference, money and income are both flows4. Of money's three functions, the one that distinguishes money from other assets is its function as aC DA) store of value B) unit of accountC) standard of deferred payment D) medium of exchange5. Compared to an economy that uses a medium of exchange, in a barter economy（以货易货经济）___A___A) transaction costs are higher. B) transaction costs are lower.C) liquidity costs are higher. D) liquidity costs are lower.6. For a commodity to function effectively as money it must be___A___.A) easily standardized, making it easy to ascertain its valueB) difficult to make change C) hard to carry aroundD) deteriorate quickly so that its supply does not become too large7. Ann purchasing concert tickets with her debit card（借记卡）is an example of the __A___ function of money.与借记卡对应的是信用卡A) medium of exchange B) unit of account C) store of value D) specialization8.Dennis notices that jackets are on sale for $99. In this case money is functioning as a __B_____.A) medium of exchange B) unit of account C) store of value D) payments-system ruler9.As a store of value, money ____D___.A) does not earn interest B) cannot be a durable asset C) must be currencyD) is a way of saving for future purchases10. ___C__B_ is the relative ease and speed that an asset can be converted into a medium of exchange.资产转化为货币的速度和容易程度称之为什么A) Efficiency B) Liquidity C) Deflation D) Specialization11. Of the following assets, the least liquid is___D____.A) stocks B) traveler's checks C) checking deposits D) a house12. A fall in the level of prices___C____.物价与货币价值呈反比关系A) does not affect the value of money B) has an uncertain effect on the value of moneyC) increases the value of money D) reduces the value of money13. Paper currency that has been declared legal tender but is not convertible into coins or precious metals is called ____B____ money. （fiat money法定货币、名义货币）A) commodity B) fiat C) electronic D) funnypared to checks, paper currency and coins have the major drawbacks that they___A____.A) are easily stolen B) are hard to counterfeit C) are not the most liquid assetsD) must be backed by gold15. Which of the following is not a form of e-money? A BA) a debit card B) a credit card 不是货币，借银行的，属于负债方C) a stored-value card D) a smart card ——储值卡16. An electronic payments system has not completely replaced the paper payments system because of all of the following reasons except___A____.DA) expensive equipment is necessary to set up the systemB) security concerns C) privacy concerns D) transportation costs.17. ____B____ is the narrowest monetary aggregate that the Fed reports.美联储A) M0 B) M1 C) M2 D) M318. Which of the following is not included in the M1 but is included in the M2? DA) Currency B) Traveler's checks C) Demand depositsD) Small-denomination time deposits19. Of the following, the largest is___D____.A) money market deposit accounts B) demand deposits C) M1 D) M220. If an individual moves money from currency to a demand deposit account, CA) M1 decreases and M2 stays the same B) M1 stays the same and M2 increasesC) M1 stays the same and M2 stays the same D) M1 increases and M2 stays the sameChapter 41.The present value of an expected future payment ___B_____ as the interest rate increases.当利率增加时，现值的未来付款会AA) falls B) rises C) is constant D) is unaffected2. With an interest rate of 6 percent, the present value of $100 next year is approximately__A___. 利率为6%时，现值为100元，明年时大约有C PV=CF/利率=100/1+0.06 现值一般小于未来值A) $106 B) $100 C) $94 D) $923. A credit market instrument that requires the borrower to make the same payment every period until the maturity date is known as a___B__.信用市场工具要求借贷者每段时间支付相同的钱直到到期是A) simple loan B) fixed-payment loan C) coupon bond D) discount bond4. A ___C_____ pays the owner a fixed coupon payment every year until the maturity date, when the ________ value is repaid.向持有者支付每年固定付款贷款，直到到期，当价值被支付A) coupon bond; discount B) discount bond; discountC) coupon bond; face D) discount bond; face5. When talking about a coupon bond, face value and ___B_____ mean the same thing.当谈到零息债券，面值和是相同的意义A 面值：face value/par valueA) par value B) coupon value C) amortized value D) discount value.6. All of the following are examples of coupon bonds (付息债权）except__D___.以下例子中除了，都是付息债券的例子 BA) Corporate bonds 长期B) U.S. Treasury bills 短期债C) U.S. Treasury notes 中期（两年以上）D) U.S. Treasury bonds长期（十年以上）7. If the amount payable in two years is $2420 for a simple loan at 10 percent interest, the loan amount is___C__.如果一个简单贷款两年的应付款为以10%的利率支付2420，则贷款金额为A) $1000 B) $1210 C) $2000 D) $22008.The yield to maturity is __A____ than the ______ rate when the bond price is _____ its face value. B到期收益率比的利率时，此时，市场价值它的面值面值由公司决定为1000，市场发售时为900，低于面值，而价格与到期收益率呈反比A) greater; coupon; above B) greater; coupon; belowC) greater; perpetuity; above D) less; perpetuity（永续债，不受市场影响，）; below9.Which of the following $5,000 face-value securities has the highest yield to maturity? B以下5000元面值的证券到期收益率最高的是 DA) A 6 percent coupon bond selling for $5,000B) A 6 percent coupon bond selling for $5,500C) A 10 percent coupon bond selling for $5,000D) A 12 percent coupon bond selling for $4,50010. The interest rate on a consol equals the __D___.债务的利率与相同A) price times the coupon payment B) price divided by the coupon paymentC) coupon payment plus the price D) coupon payment divided by the price11. The sum of the current yield and the rate of capital gain（资本利得=收益/本金）is called the _A____.当前的总收益和资本收益率被称为A) rate of return B) discount yield C) perpetuity yield D) par value.12. The return on a 5 percent coupon bond that initially sells for $1,000 and sells for $950 next year is __A___. C 资本利得=-5% 利息=5% 回报率=两者相加=05%的零息债券最初售价为1000元，下一年售价为950的回报率为A) -10 percent B) -5 percent C) 0 percent D) 5 percent13. Interest-rate risk is the riskiness of an asset's returns due to__B___.利率风险是资产由于的风险 AA) interest-rate changes (利率改变）B) changes in the coupon rate（）C) default of the borrower( credit risk信用风险) D) changes in the asset's maturity14. An equal decrease in all bond interest rates___A__.所有债权利率下降同样多会BA) increases the price of a five-year bond more than the price of a ten-year bondB) increases the price of a ten-year bond more than the price of a five-year bondC) decreases the price of a five-year bond more than the price of a ten-year bondD) decreases the price of a ten-year bond more than the price of a five-year bond15. The ____B____ interest rate more accurately reflects the true cost of borrowing.的利率会更准确的反映到对借贷的实际支付A) nominal B) real C) discount D) market16. When the ____C____ interest rate is low, there are greater incentives to ________ and fewer incentives to ________.当的利率降低，的让利会增大，的让利会降低A) nominal; lend; borrow B) real; lend; borrowC) real; borrow; lend D) market; lend; borrow17.The ___A_____ states that the nominal interest rate equals the real interest rate plus the expected rate of inflation.表明名义利率等于实际利率加上通货膨胀的预期利率A) Fisher equation B) Keynesian equation C) Monetarist equation D) Marshall equation18. If you expect the inflation rate to be 4 percent next year and a one year bond has a yield to maturity of 7 percent, then the real interest rate on this bond is ___C_____.如果你希望明年的通货膨胀率为4%，一年期债券的到期收益率达到7%，则这种债券的实际利率为A) -3 percent B) -2 percent C) 3 percent D) 7 percent19. The yield to maturity for a discount bond is ____A____ related to the current bond price.贴现债券的到期收益率与债券的现值的关系为A) negatively B) positively C) not D) directly20. The yield to maturity for a one-year discount bond equals the increase in price over the year, divided by the___A_____.一年期的贴现债券的到期收益率等于一年来价格的上涨除以A)initial price B) face value C) interest rate D) coupon rateChapter 101.Which of the following statements are true? D以下哪个描述是对的CA) A bank's assets are its sources of funds. B) A bank's liabilities are its uses of funds.C) A bank's balance sheet shows that total assets equal total liabilities plus equity capital.D) A bank's balance sheet indicates whether or not the bank is profitable.2. Which of the following are reported as liabilities on a bank's balance sheet? B下列哪个选项是作为银行资产负债表的负债A) Reserves B) Checkable deposits C) Loans D) Deposits with other banks3. Because checking accounts are ___D_____ liquid for the depositor than passbook savings, they earn ________ interest rates.因为活期存款对于存款人具有比存折储蓄的流动性，因而他们可以获得利息A) less; higher B) less; lower C) more; higher D) more; lower4. Bank loans from the Federal Reserve are called ____C____ and represent a ________ of funds. 来自美联储的银行贷款被称为B且代表了一种基金A) discount loans; use B) discount loans; source C) fed funds; use D) fed funds; source5. Bank capital is equal to ___A_____ minus ________.银行资本相当于减去。
货币金融学练习第四章答案
货币金融学(米什金教材) 第四章理解利率配套习题答案本章概要、填空1现值 2 负3固定支付4 息票利率5 贴现6 息票7 长8 增加9 回报率10到期期限11 利率12 信用市场练习练习1（a）50/(1+i) (b) 50/ (1+i)2 (c) 50 (1+i)2 (d) 50 (1+i)练习21. 435.51=500/(1+0.05) 22. 413.22=500/(1+0.10) 23. 341.51=500/(1+0.10) 44. 现值下跌5现值下跌练习3Part A1. 1000=600/(1+i)+600/(1+i) 22. 1041美元3高于4. 975美元5.低于Part B1低于，因为债券价格高于面值2 1079=100/(1+i) + 100/(1+i) 2 +1100/(1+i)3 3。
1052美元4 低于5 1136美元6 高于练习4该表格说明，随着贴现债券到期期限的缩短，贴现基础上的收益率对到期收益率的低估程度缩小。
练习52030年到期的6 1/4、2026年11月到期的6 1/2、2005年5月到期的6 3/4的债券，这三种债券当期收益率能够较好地衡量利率。
原因是，这三种债券出售的价格接近于面值，而且2026年11月到期的6 1/2、2030年到期的6 1/4的到期期限很长。
练习61．110%。
计算过程如下：永续债券年初的价格为1000美元=100美元/0.10，下一年的价格为2000美元=100美元/0/05.因此，回报率等于110%=1.10=（2000美元-1000美元+100美元）/1000美元2. 14.8%。
计算过程如下：息票债券年初价格为1000美元，因为债券平价出售，所以利率等于息票利率。
下一年，因为债券还有1年到期，价格为1048美元=100美元/（1+0.05）+1000美元/(1+0.05)。
因此，回报率等于14.9%=0.148=（1048美元-1000美元+100美元）/1000美元永续债券是更好的投资，因为如果两种债券的利率同样下跌，到期期限较长的债券，即永续债券的价格上升幅度更大。
米什金货币金融学英文版习题答案chapter1英文习题
米什金货币金融学英文版习题答案chapter1英文习题Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin) Chapter 1 Why Study Money, Banking, and Financial Markets?1.1 Why Study Financial Markets?1) Financial markets promote economic efficiency byA) channeling funds from investors to savers.B) creating inflation.C) channeling funds from savers to investors.D) reducing investment.Answer: CAACSB: Reflective Thinking2) Financial markets promote greater economic efficiency by channeling funds from ________ to ________.A) investors; saversB) borrowers; saversC) savers; borrowersD) savers; lendersAnswer: CAACSB: Reflective Thinking3) Well-functioning financial markets promoteA) inflation.B) deflation.C) unemployment.D) growth.Answer: DAACSB: Reflective Thinking4) A key factor in producing high economic growth isA) eliminating foreign trade.B) well-functioning financial markets.C) high interest rates.D) stock market volatility.Answer: BAACSB: Reflective Thinking5) Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are calledA) commodity markets.B) fund-available markets.C) derivative exchange markets.D) financial markets.Answer: DAACSB: Application of Knowledge6) ________ markets transfer funds from people who have an excess of available funds to people who have a shortage.A) CommodityB) Fund-availableC) FinancialD) Derivative exchangeAnswer: CAACSB: Application of Knowledge7) Poorly performing financial markets can be the cause ofA) wealth.B) poverty.C) financial stability.D) financial expansion.Answer: BAACSB: Reflective Thinking8) The bond markets are important because they areA) easily the most widely followed financial markets in the United States.B) the markets where foreign exchange rates are determined.C) the markets where interest rates are determined.D) the markets where all borrowers get their funds.Answer: CAACSB: Reflective Thinking9) The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as theA) inflation rate.B) exchange rate.C) interest rate.D) aggregate price level.Answer: CAACSB: Application of Knowledge10) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury bills fluctuate ________ and are ________ on average.A) more; lowerB) less; lowerC) more; higherD) less; higherAnswer: AAACSB: Reflective Thinking11) The interest rate on Baa corporate bonds is ________, on average, than interest rates on Treasuries, and the spread between these rates became ________ in the 1970s.A) lower; smallerB) lower; largerC) higher; smallerD) higher; largerAnswer: DAACSB: Reflective Thinking12) Everything else held constant, a decline in interest rates will cause spending on housing toA) fall.B) remain unchanged.C) either rise, fall, or remain the same.D) rise.Answer: DAACSB: Analytical Thinking13) High interest rates might ________ purchasing a house or car but at the same time high interest rates might ________ saving.A) discourage; encourageB) discourage; discourageC) encourage; encourageD) encourage; discourageAnswer: AAACSB: Analytical Thinking14) An increase in interest rates might ________ saving because more can be earned in interest income.A) encourageB) discourageC) disallowD) invalidateAnswer: AAACSB: Analytical Thinking15) Everything else held constant, an increase in interest rates on student loansA) increases the cost of a college education.B) reduces the cost of a college education.C) has no effect on educational costs.D) increases costs for students with no loans.Answer: AAACSB: Analytical Thinking16) High interest rates might cause a corporation to ________ building a new plant that would provide more jobs.A) completeB) considerC) postponeD) contemplateAnswer: CAACSB: Analytical Thinking17) The stock market isA) where interest rates are determined.B) the most widely followed financial market in the United States.C) where foreign exchange rates are determined.D) the market where most borrowers get their funds.Answer: BAACSB: Reflective Thinking18) Stock prices areA) relatively stable trending upward at a steady pace.B) relatively stable trending downward at a moderate rate.C) extremely volatile.D) unstable trending downward at a moderate rate.Answer: CAACSB: Reflective Thinking19) A rising stock market index due to higher share pricesA) increases people's wealth, but is unlikely to increase their willingness to spend.B) increases people's wealth and as a result may increase their willingness to spend.C) decreases the amount of funds that business firms can raise by selling newly-issued stock.D) decreases people's wealth, but is unlikely to increase their willingness to spend. Answer: BAACSB: Analytical Thinking20) When stock prices fallA) an individual's wealth is not affected nor is their willingness to spend.B) a business firm will be more likely to sell stock to finance investment spending.C) an individual's wealth may decrease but their willingness to spend is not affected.D) an individual's wealth may decrease and their willingness to spend may decrease. Answer: DAACSB: Analytical Thinking21) Changes in stock pricesA) do not affect people's wealth and their willingness to spend.B) affect firms' decisions to sell stock to finance investment spending.C) occur in regular patterns.D) are unimportant to decision makers.Answer: BAACSB: Reflective Thinking22) An increase in stock prices ________ the size of people's wealth and may ________ their willingness to spend, everythingelse held constant.A) increases; increaseB) increases; decreaseC) decreases; increaseD) decreases; decreaseAnswer: AAACSB: Analytical Thinking23) Low stock market prices might ________ consumers’ willingness to spend and might________ businesses willingness to undertake investment projects.A) increase; increaseB) increase; decreaseC) decrease; decreaseD) decrease; increaseAnswer: CAACSB: Analytical Thinking24) Fear of a major recession causes stock prices to fall, everything else held constant, which in turn causes consumer spending toA) increase.B) remain unchanged.C) decrease.D) cannot be determined.Answer: CAACSB: Reflective Thinking25) A share of common stock is a claim on a corporation'sA) debt.B) liabilities.C) expenses.D) earnings and assets.Answer: DAACSB: Application of Knowledge26) On ________, October 19, 1987, the stock market experienced its worst one-day drop in its entire history with the DJIA falling by 22%.A) "Terrible Tuesday"B) "Woeful Wednesday"C) "Freaky Friday"D) "Black Monday"Answer: DAACSB: Application of Knowledge27) The decline in stock prices from 2000 through 2002A) increased individuals' willingness to spend.B) had no effect on individual spending.C) reduced individuals' willingness to spend.D) increased individual wealth.Answer: CAACSB: Analytical Thinking28) The Dow reached a peak of over 11,000 before the collapse of the ________ bubble in 2000.A) housingB) manufacturingC) high-techD) bankingAnswer: CAACSB: Application of Knowledge29) When I purchase a corporate ________, I am lending the corporation funds for a specific time. When I purchase a corporation's ________, I become an owner in the corporation.A) bond; stockB) stock; bondC) stock; debt securityD) bond; debt securityAnswer: AAACSB: Application of Knowledge30) What is a stock? How do stocks affect the economy?Answer: A stock represents a share of ownership of a corporation, or a claim on a firm's earnings/assets. Stocks are part of wealth, and changes in their value affect people's willingness to spend. Changes in stock prices affect a firm's ability to raise funds, and thus their investment. AACSB: Application of Knowledge31) Why is it important to understand the bond market?Answer: The bond market supports economic activity by enabling the government and corporations to borrow to undertake their projects and it is the market where interest rates are determined.AACSB: Application of Knowledge1.2 Why Study Financial Institutions and Banking?1) Channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower's security is known asA) barter.B) redistribution.C) financial intermediation.D) taxation.Answer: CAACSB: Application of Knowledge2) A financial crisis isA) not possible in the modern financial environment.B) a major disruption in the financial markets.C) a feature of developing economies only.D) typically followed by an economic boom.Answer: BAACSB: Application of Knowledge3) Banks are important to the study of money and the economy because theyA) channel funds from investors to savers.B) have been a source of rapid financial innovation.C) are the only important financial institution in the U.S. economy.D) create inflation.Answer: BAACSB: Reflective Thinking4) BanksA) provide a channel for linking those who want to save with those who want to invest.B) produce nothing of value and are therefore a drain on society's resources.C) are the only financial institutions allowed to give loans.D) hold very little of the average American's wealth.Answer: AAACSB: Reflective Thinking5) Banks, savings and loan associations, mutual savings banks, and credit unionsA) are no longer important players in financial intermediation.B) since deregulation now provide services only to small depositors.C) have been adept at innovating in response to changes in the regulatory environment.D) produce nothing of value and are therefore a drain on society's resources.Answer: CAACSB: Reflective Thinking6) Financial institutions search for ________ has resulted in many financial innovations.A) higher profitsB) regulationsC) respectD) higher riskAnswer: AAACSB: Application of Knowledge7) Banks and other financial institutions engage in financial intermediation, whichA) can hurt the performance of the economy.B) can benefit economic performance.C) has no effect on economic performance.D) involves borrowing from investors and lending to savers.Answer: BAACSB: Reflective Thinking8) Financial institutions that accept deposits and make loans are calledA) exchanges.B) banks.C) over-the-counter markets.D) finance companies.Answer: BAACSB: Application of Knowledge9) The financial intermediaries that the average person interacts with most frequently areA) exchanges.B) over-the-counter markets.C) finance companies.D) banks.Answer: DAACSB: Application of Knowledge10) Which of the following is NOT a financial institution?A) A life insurance companyB) A pension fundC) A credit unionD) A business collegeAnswer: DAACSB: Application of Knowledge11) The delivery of financial services electronically is calledA) e-business.B) e-commerce.C) e-finance.D) e-possible.Answer: CAACSB: Information Technology12) What crucial role do financial intermediaries perform in an economy?Answer: Financial intermediaries borrow funds from people who have saved and make loans to other individuals and businesses and thus improve the efficiency of the economy.AACSB: Reflective Thinking1.3 Why Study Money and Monetary Policy?1) Money is defined asA) bills of exchange.B) anything that is generally accepted in payment for goods and services or in the repayment of debt.C) a risk-free repository of spending power.D) the unrecognized liability of governments.Answer: BAACSB: Application of Knowledge2) The upward and downward movement of aggregate output produced in the economy is referred to as theA) roller coaster.B) see saw.C) business cycle.D) shock wave.Answer: CAACSB: Application of Knowledge3) Sustained downward movements in the business cycle are referred to asA) inflation.B) recessions.C) economic recoveries.D) expansions.Answer: BAACSB: Application of Knowledge4) During a recession, output declines result inA) lower unemployment in the economy.B) higher unemployment in the economy.C) no impact on the unemployment in the economy.D) higher wages for the workers.Answer: BAACSB: Analytical Thinking5) Prior to almost all recessions since 1950, there has been a drop inA) inflation.B) the money stock.C) the growth rate of the money stock.D) interest rates.Answer: CAACSB: Application of Knowledge6) Evidence from business cycle fluctuations in the United States indicates thatA) a negative relationship between money growth and general economic activity exists.B) recessions are usually preceded by declines in bond prices.C) recessions are usually preceded by dollar depreciation.D) recessions are usually preceded by a decline in the growth rate of money.Answer: DAACSB: Reflective Thinking7) ________ theory relates the quantity of money and monetary policy to changes in aggregate economic activity and inflation.A) MonetaryB) FiscalC) FinancialD) SystemicAnswer: AAACSB: Application of Knowledge8) A continuing increase in the growth of the money supply is likely followed byA) a recession.B) a depression.C) an increase in the price level.D) no change in the economy.Answer: CAACSB: Reflective Thinking9) It is true that inflation is aA) continuous increase in the money supply.B) continuous fall in prices.C) decline in interest rates.D) continually rising price level.Answer: DAACSB: Application of Knowledge10) Which of the following is a TRUE statement?A) Money or the money supply is defined as Federal Reserve notes.B) The average price of goods and services in an economy is called the aggregate price level.C) The inflation rate is measured as the rate of change in the federal government budget deficit.D) The aggregate price level is measured as the rate of change in the inflation rate.Answer: BAACSB: Application of Knowledge11) If the prices would have been much higher ten years ago for the items the average consumer purchased last month, then one can likely conclude thatA) the aggregate price level has declined during this ten-year period.B) the average inflation rate for this ten-year period has been positive.C) the average rate of money growth for this ten-year period has been positive.D) the aggregate price level has risen during this ten-year period.Answer: AAACSB: Analytical Thinking12) From 1950-2014 the price level in the United States increased more thanA) twofold.B) threefold.C) sixfold.D) tenfold.Answer: DAACSB: Reflective Thinking13) Complete Milton Friedman's famous statement, "Inflation is always and everywhere a________ phenomenon."A) recessionaryB) discretionaryC) repressionaryD) monetaryAnswer: DAACSB: Application of Knowledge14) There is a ________ association between inflation and the growth rate of money ________.A) positive; demandB) positive; supplyC) negative; demandD) negative; supplyAnswer: BAACSB: Application of Knowledge15) Evidence from the United States and other foreign countries indicates thatA) there is a strong positive association between inflation and growth rate of money over long periods of time.B) there is little support for the assertion that "inflation is always and everywhere a monetary phenomenon."C) countries with low monetary growth rates tend to experience higher rates of inflation, all else being constant.D) money growth is clearly unrelated to inflation.Answer: AAACSB: Reflective Thinking16) Countries that experience very high rates of inflation may also haveA) balanced budgets.B) rapidly growing money supplies.C) falling money supplies.D) constant money supplies.Answer: BAACSB: Reflective Thinking17) Between 1950 and 1980 in the U.S., interest rates trended upward. During this same time periodA) the rate of money growth declined.B) the rate of money growth increased.C) the government budget deficit (expressed as a percentage of GNP) trended downward.D) the aggregate price level declined quite dramatically.Answer: BAACSB: Reflective Thinking18) The management of money and interest rates is called________ policy and is conducted bya nation's ________ bank.A) monetary; superiorB) fiscal; superiorC) fiscal; centralD) monetary; centralAnswer: DAACSB: Application of Knowledge19) The organization responsible for the conduct of monetary policy in the United States is theA) Comptroller of the Currency.B) U.S. Treasury.C) Federal Reserve System.D) Bureau of Monetary Affairs.Answer: CAACSB: Application of Knowledge20) ________ policy involves decisions about government spending and taxation.A) MonetaryB) FiscalC) FinancialD) SystemicAnswer: BAACSB: Application of Knowledge21) When tax revenues are greater than government expenditures, the government has a budgetA) crisis.B) deficit.C) surplus.D) revision.AACSB: Application of Knowledge22) A budget ________ occurs when government expenditures exceed tax revenues for a particular time period.A) deficitB) surplusC) surgeD) surfeitAnswer: AAACSB: Application of Knowledge23) Budgets deficits can be a concern because they mightA) ultimately lead to higher inflation.B) lead to lower interest rates.C) lead to a slower rate of money growth.D) lead to higher bond prices.Answer: AAACSB: Reflective Thinking24) Budget deficits are important because deficitsA) cause bank failures.B) always cause interest rates to fall.C) can result in higher rates of monetary growth.D) always cause prices to fall.Answer: CAACSB: Reflective Thinking25) When a budget deficit occurs in the United States, the U.S. Treasury finances this deficit byA) borrowing.B) imposing a moratorium of new government spending.C) increasing the tax rate.D) printing more dollars.AACSB: Application of Knowledge26) What happens to economic growth and unemployment during a business cycle recession? What is the relationship between the money growth rate and a business cycle recession? Answer: During a recession, output declines and unemployment increases. Prior to almost every recession in the U.S. the money growth rate has declined; however, not every decline is followed by a recession.AACSB: Reflective Thinking1.4 Why Study International Finance?1) American companies can borrow fundsA) only in U.S. financial markets.B) only in foreign financial markets.C) in both U.S. and foreign financial markets.D) only from the U.S. government.Answer: CAACSB: Diverse and multicultural work environments2) The price of one country's currency in terms of another country's currency is called theA) exchange rate.B) interest rate.C) Dow Jones industrial average.D) prime rate.Answer: AAACSB: Application of Knowledge3) The market where one currency is converted into another currency is called the ________ market.A) stockB) bondC) derivativesD) foreign exchangeAnswer: DAACSB: Application of Knowledge4) Everything else constant, a stronger dollar will mean thatA) vacationing in England becomes more expensive.B) vacationing in England becomes less expensive.C) French cheese becomes more expensive.D) Japanese cars become more expensive.Answer: BAACSB: Analytical Thinking5) Which of the following is most likely to result from a stronger dollar?A) U.S. goods exported aboard will cost less in foreign countries, and so foreigners will buy more of them.B) U.S. goods exported aboard will cost more in foreign countries and so foreigners will buy more of them.C) U.S. goods exported abroad will cost more in foreign countries, and so foreigners will buy fewer of them.D) Americans will purchase fewer foreign goods.Answer: CAACSB: Diverse and multicultural work environments6) Everything else held constant, a weaker dollar will likely hurtA) textile exporters in South Carolina.B) wheat farmers in Montana that sell domestically.C) automobile manufacturers in Michigan that use domestically produced inputs.D) furniture importers in California.Answer: DAACSB: Diverse and multicultural work environments7) Everything else held constant, a stronger dollar benefits ________ and hurts ________.A) American businesses; American consumersB) American businesses; foreign businessesC) American consumers; American businessesD) foreign businesses; American consumersAnswer: CAACSB: Diverse and multicultural work environments8) From 1980 to early 1985 the dollar ________ in value, thereby benefiting American________.A) appreciated; consumersB) appreciated, businessesC) depreciated; consumersD) depreciated, businessesAnswer: AAACSB: Diverse and multicultural work environments9) From 1980 to 1985 the dollar appreciated relative to the British pound. Holding everything else constant, one would expect that, when compared to 1980A) fewer Britons traveled to the United States in 1985.B) Britons imported more wine from California in 1985.C) Americans exported more wheat to England in 1985.D) more Britons traveled to the United States in 1985.Answer: AAACSB: Diverse and multicultural work environments10) When in 1985 a British pound cost approximately $1.30,a Shetland sweater that cost 100 British pounds would have cost $130. With a weaker dollar, the same Shetland sweater wouldhave costA) less than $130.B) more than $130.C) $130, since the exchange rate does not affect the prices that American consumers pay for foreign goods.D) $130, since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar.Answer: BAACSB: Diverse and multicultural work environments11) Everything else held constant, a decrease in the value of the dollar relative to all foreign currencies means that the price of foreign goods purchased by AmericansA) increases.B) decreases.C) remains unchanged.D) either increases, decreases, or remains unchanged.Answer: AAACSB: Diverse and multicultural work environments12) American farmers who sell beef to Europe benefit most fromA) a decrease in the dollar price of euros.B) an increase in the dollar price of euros.C) a constant dollar price for euros.D) a European ban on imports of American beef.Answer: BAACSB: Diverse and multicultural work environments13) If the price of a euro (the European currency) increases from $1.00 to $1.10, then, everything else held constantA) a European vacation becomes less expensive.B) a European vacation becomes more expensive.C) the cost of a European vacation is not affected.D) foreign travel becomes impossible.Answer: BAACSB: Application of Knowledge14) Everything else held constant, Americans who love French wine benefit most fromA) a decrease in the dollar price of euros.B) an increase in the dollar price of euros.C) a constant dollar price for euros.D) a ban on imports from Europe.Answer: AAACSB: Application of Knowledge15) From 2000 to 2014, the dollar depreciated substantially against other currencies. This drop in value most likely benefittedA) European citizens traveling in the U.S.B) U.S. citizens traveling in Europe.C) U.S. manufacturers importing parts from abroad.D) U.S. citizens purchasing foreign-made automobiles.Answer: AAACSB: Application of Knowledge16) From 1980-1985, the dollar strengthened in value against other currencies. Who was helped and who was hurt by this strong dollar?Answer: American consumers benefitted because imports were cheaper and consumers could purchase more. American businesses and workers in those businesses were hurt as domestic and foreign sales of American products fell.AACSB: Reflective Thinking1.5 How We Will Study Money, Banking, and Financial Markets1) The basic concepts used in the analytic framework of this text include all of the following EXCEPTA) the not-for-profit nature of most financial institutions.B) a basic supply and demand analysis to explain the behavior of financial markets.C) an approach to financial structure based on transaction costs and asymmetric information.D) the concept of equilibrium.Answer: AAACSB: Application of Knowledge2) Using a unified analytic framework to present the information in the text keeps the knowledgeA) focused on theories that have little to do with actual behavior.B) theoretical and uninteresting.C) abstract and not applicable to real life.D) from becoming obsolete.Answer: DAACSB: Application of Knowledge1.6 Appendix: Defining Aggregate Output, Income, the Price Level, and the Inflation Rate1) The most comprehensive measure of aggregate output isA) gross domestic product.B) net national product.C) the stock value of the industrial 500.D) national income.Answer: AAACSB: Application of Knowledge2) The gross domestic product is theA) the value of all wealth in an economy.B) the value of all goods and services sold to other nations in a year.C) the market value of all final goods and services produced in an economy in a year.D) the market value of all intermediate goods and services produced in an economy in a year. Answer: CAACSB: Application of Knowledge3) Which of the following items are NOT counted in U.S. GDP?A) your purchase of a new Ford MustangB) your purchase of new tires for your old carC) GM's purchase of tires for new carsD) a foreign consumer's purchase of a new Ford MustangAnswer: CAACSB: Reflective Thinking4) If an economy has aggregate output of $20 trillion, then aggregate income isA) $10 trillion.B) $20 trillion.C) $30 trillion.D) $40 trillion.Answer: BAACSB: Analytical Thinking5) When the total value of final goods and services is calculated using current prices, the resulting measure is referred to asA) real GDP.B) the GDP deflator.C) nominal GDP.D) the index of leading indicators.Answer: CAACSB: Application of Knowledge6) Nominal GDP is output measured in ________ prices while real GDP is output measured in ________ prices.A) current; currentB) current; fixedC) fixed; fixedD) fixed; currentAnswer: BAACSB: Application of Knowledge7) GDP measured with constant prices is referred to asA) real GDP.B) nominal GDP.C) the GDP deflator.D) industrial production.Answer: AAACSB: Application of Knowledge8) If your nominal income in 2014 was $50,000, and prices doubled between 2014 and 2017, to have the same real income, your nominal income in 2017 must beA) $50,000.B) $75,000.C) $90,000.D) $100,000.Answer: DAACSB: Analytical Thinking9) If your nominal income in 2014 is $50,000, and prices increase by 50% between 2014 and 2017, then to have the same real income, your nominal income in 2017 must beA) $50,000.B) $75,000.。
货币金融学Chapter 4
Understanding Interest Rates
Main Concepts
• Present Discounted Value (PDV) • What is an interest rate?
Yield to maturity A measure of an Intertemporal Price
900 11.75 Consider a bond with the following characteristics: 800 13.81 10% Coupon-Rate, Face Value = $1000, Bond Maturing in 10 Years Three Interesting Facts Emerge from the table above: • When bond is at par, yield equals coupon rate • Price and yield are negatively related • Yield greater than coupon rate when bond price is below par value
Note: These lecture notes are incomplete without having attended lectures.
Yield on a Discount Basis
F −P 360 idb = × F ( number of days to maturity )
Consider the following bill, P = $900, F = $1000 which has 1 year to maturity.
– Lottery Win: $1 Million today vs.. $1000pm for next 10 years? – $500 five years from now vs. $800 ten years from now?
米什金《货币金融学-英文第12版》PPT课件-第四章-利率和利率的计算(包括利率分类及现值终值计算)
FinanceChapter2 Financial MarketsInterest Rates and Calculation of Interest RatesThe Behavior of Interest RatesThe Risk and Term Structure of Interest RatesThe Stock MarketTheory of Rational Expectations, and the Efficient Market HypothesisLecture 4Interest Rates and Calculation of Interest Rates •Interest Rate and Classification of Interest Rate •Simple and Compound Interest Rate •Present Value•Yield to Maturity and Its Calculation•The Distinction Between Interest Rates And ReturnsLearning ObjectivesCalculate the present value of future cash flows and the yield to maturity on the four types of credit market instruments.Recognize the distinctions among yield to maturity, current yield, rate of return, and rate of capital gain.Interpret the distinction between real and nominal interest rates.Part 1Interest Rate and Classification of Interest Rate1.1 Interest RateInterest rate (P3) is the cost of borrowing or the price paid for the rental of funds.利率是借款的成本或为借入资金支付的价格。
货币金融学11ge_TestBank web chapter 4
Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin)Web Chapter 4: Conflicts of Interest in the Financial IndustryWC 4.1 What are Conflicts of Interest, and Why are They Important?1) Conflicts of interest is a type of ________ problem that occurs when a person or institution has multiple objectives that are in conflict with each other.A) moral hazardB) adverse selectionC) risk sharingD) spinningAnswer: AAACSB: Reflective thinking2) A type of ________ problem that occurs when a person or institution has multiple objectives that conflict with each other is called ________.A) moral hazard; conflicts of interestB) adverse selection; conflicts of interestC) moral hazard; spinningD) adverse selection; spinningAnswer: AAACSB: Written and oral communication3) When financial institutions are able to reduce the costs of information for each service they offer by applying the same information source to each service, we say that the financial institution is realizingA) economies of scope.B) economies of scale.C) increasing returns.D) diminishing marginal returns.Answer: AAACSB: Written and oral communication4) Which of the following is an example of a bank realizing economies of scope?A) The bank develops a standard mortgage loan application to make the process of loaning out mortgages easier.B) The bank reduces costs of credit checking for the loan process by outsourcing the process to a specialist.C) By using the information collected from a corporation, the bank can decide how easy it would be to sell bonds issued by the corporation to the public.D) A bank in a rural area specializes in providing agricultural loans.Answer: CAACSB: Reflective thinking5) One problem with conflicts of interest is that they can reduce the ________ in financial markets, thereby increasing ________.A) quantity of information; financial institutions' profitsB) quantity of information; asymmetric informationC) quality of information; asymmetric informationD) quality of information; financial institutions' profitsAnswer: CAACSB: Reflective thinking6) Describe what is meant by economies of scope and explain how financial institutions' realizing economies of scope has led to an increase in conflicts of interest.Answer: Economies of scope is when firms can reduce costs by offering different products or services. For a financial institution, this usually takes the form of taking one information source and using it to provide a different array of services. This may lead to conflicts of interest because these services may have conflicting goals in which employees of different departments may conceal information or disseminate misleading information to financial markets.AACSB: Written and oral communicationWC 4.2 Ethics and Conflicts of Interest1) Not surprisingly, when financial institutions have consolidated more services under one roof, the amount of conflicts of interest has ________, which has led to ________ in unethical behavior.A) increased; an increaseB) increased; a decreaseC) decreased; an increaseD) decreased; a decreaseAnswer: AAACSB: Reflective thinkingWC 4.3 Types of Conflicts of Interest1) In investment banking, a conflict usually is present between the issuers of securities, who________, and investors, who ________.A) benefit from unbiased auditing; desire unbiased consultingB) desire unbiased research; benefit from optimistic researchC) benefit from optimistic research; desire unbiased researchD) desire unbiased consulting; benefit from unbiased auditingAnswer: CAACSB: Reflective thinking2) The incentive for analysts in investment banks to distort research increases whenA) revenues from brokerage commissions increase.B) the potential revenues from underwriting greatly exceed brokerage commissions.C) the potential brokerage commissions greatly exceed revenues from underwriting.D) revenues from underwriting decrease.Answer: BAACSB: Reflective thinking3) When investment banks allocate shares of a popular but underpriced IPO to executives of other firms in order to attract their business, it is calledA) spinning.B) a bribe.C) reputational activities.D) a kickback.Answer: AAACSB: Written and oral communication4) The problem with spinning is that it may ________ the cost of capital to a firm and thus________ the efficiency of the capital market.A) increase; increaseB) increase; decreaseC) decrease; increaseD) decrease; decreaseAnswer: BAACSB: Reflective thinking5) Which of the following is not a conflict of interest in accounting firms?A) The firm provides consulting as well as rating creditworthiness.B) Auditors may be pressured to skew their opinions so the client will stay with the firm.C) Auditors may be reluctant to criticize advice put into place by nonaudit personnel of the firm.D) Auditors release an overly favorable audit in order to solicit business.Answer: AAACSB: Analytical thinking6) Advice on taxes, accounting or management information systems, and business strategies are commonly referred to as ________ services.A) accounting auditB) management advisoryC) sellerD) managing underwriterAnswer: BAACSB: Written and oral communication7) Conflicts of interest arising from management advisory services brought down ________ in 2002.A) EnronB) WorldCommC) Arthur AndersenD) Global CrossingAnswer: CAACSB: Written and oral communication8) Conflicts of interest may arise within the credit rating agencies becauseA) the investors pay the credit agencies for ratings.B) the issuers of debt securities pay the credit agencies for ratings.C) the credit rating agencies provide auditing services to issuers of debt securities.D) the credit rating agencies are involved in offering credit counseling to investors.Answer: BAACSB: Reflective thinking9) When the Glass-Steagall Act was repealed in 1999, potential conflicts of interest arose withA) the development of universal banking.B) the introduction of more credit-rating agencies.C) accounting firms developing more comprehensive services.D) investment analysis in investment banking.Answer: AAACSB: Reflective thinking10) Explain the type of conflicts of interest that can arise from the development of universal banking.Answer: There are five main conflicts of interest:1. The underwriting department would benefit from aggressive sales of a security to the customers of a bank where the customers would benefit from unbiased advice.2. A bank manager may try to hard-sell an issuing firm's securities to the disadvantage of the bank customer or limit losses of an underperforming IPO to the bank's trust accounts.3. A bank may push a bond issue of a firm with a high default risk to pay off a loan the bank has with the firm.4. May grant favorable loan conditions to a firm in return for fees to perform underwriting activities.4. May try to hard-sell the bank's insurance to its customers.AACSB: Written and oral communicationWC 4.4 Can the Market Limit Exploitation of Conflicts of Interest?1) Evidence suggests that credit-rating agencies ________ exploited conflicts of interest because ________.A) have not; it would cause their ratings to lose credibility and thus have a lower value in the marketplaceB) have not; they would have an increase in profits in the long-runC) have; it would cause their ratings to lose credibility and thus have a lower value in the marketplaceD) have; they would have an increase in profits in the long-runAnswer: AAACSB: Reflective thinking2) Evidence suggests that the market ________ take into account the credibility of analyst's recommendations of IPOs that were underwritten at the analyst's investment bank because the performance of these recommendations was about 50% ________ compared to recommendations made by other analysts at different investment banks.A) does; betterB) does; worseC) does not; betterD) does not; worseAnswer: BAACSB: Reflective thinking3) Reputational rents refer toA) the profit earned by a firm when it captures economies of scope.B) the costs associated with building credibility of a firm.C) the profit earned solely based on the credibility of a firm.D) the costs associated with the firm's achievement of economies of scale.Answer: CAACSB: Reflective thinking4) Explain how the market can reduce the incentive for credit-rating firms to take advantage of conflicts of interest.Answer: If a credit-rating firm gives a higher than deserved rating to debt issuers, then the ratings from the firm will lose credibility. If that happens, then the ratings will have a lower value in the marketplace.AACSB: Written and oral communicationWC 4.5 What Has Been Done to Remedy Conflicts of Interest?1) Which of the following is not a part of the Sarbanes-Oxley Act of 2002?A) the establishment of a Public Company Accounting Oversight Board (PCAOB) to supervise accounting firms and thus insure that audits are independent and controlled for qualityB) increased penalties for white-collar crime and obstruction of official investigationsC) requires a CEO and CFO to certify that periodic financial statements and disclosure of the firm are accurateD) requires investment banks to make public their analysts' recommendationsAnswer: DAACSB: Analytical thinking2) Which policy measure increased the SEC budget to supervise securities markets?A) Sarbanes-Oxley Act of 2002B) Global Legal Settlement of 2002C) Gramm-Leach-Bliley Act of 1999D) Riegle-Neal Act of 1994Answer: AAACSB: Reflective thinking3) Which policy measure makes it unlawful for a registered public accounting firm to provide any nonaudit service to a client contemporaneously with an impermissible audit?A) Sarbanes-Oxley Act of 2002B) Global Legal Settlement of 2002C) Gramm-Leach-Bliley Act of 1999D) Riegle-Neal Act of 1994Answer: AAACSB: Reflective thinking4) Which policy measure increases the punishment for white-collar crime and obstruction of official investigations?A) Sarbanes-Oxley Act of 2002B) Global Legal Settlement of 2002C) Gramm-Leach-Bliley Act of 1999D) Riegle-Neal Act of 1994Answer: AAACSB: Reflective thinking5) Which of the following is a part of the Global Legal Settlement of 2002?A) The establishment of a Public Company Accounting Oversight Board (PCAOB) to supervise accounting firms and thus insure that audits are independent and controlled for quality.B) Increased penalties for white-collar crime and obstruction of official investigations.C) Requires a CEO and CFO to certify that periodic financial statements and disclosure of the firm are accurate.D) Requires investment banks to make public their analysts' recommendations.Answer: DAACSB: Reflective thinking6) Which policy measure requires investment banks to sever the links between research and securities underwriting?A) Sarbanes-Oxley Act of 2002B) Global Legal Settlement of 2002C) Gramm-Leach-Bliley Act of 1999D) Riegle-Neal Act of 1994Answer: BAACSB: Reflective thinking7) Which policy measure bans spinning?A) Sarbanes-Oxley Act of 2002B) Global Legal Settlement of 2002C) Gramm-Leach-Bliley Act of 1999D) Riegle-Neal Act of 1994Answer: BAACSB: Reflective thinking8) Which policy measure requires investment banks to make public their analysts' recommendations?A) Sarbanes-Oxley Act of 2002B) Global Legal Settlement of 2002C) Gramm-Leach-Bliley Act of 1999D) Riegle-Neal Act of 1994Answer: BAACSB: Reflective thinking9) The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 included which of the following provisions to deal with conflicts of interest in the credit-rating Industry?1. Created an Office of Credit Ratings at the SEC with its own staff and the authority to fine credit-rating agencies and to deregister an agency if it produces bad ratings.2. Forced credit-rating agencies to provide reports to the SEC when their employees go to work for a company that has been rated by them in the last twelve months.3. Prohibited compliance officers from being involved in producing or selling credit ratings.4. Required the SEC to prevent issuers of asset-backed securities from choosing thecredit-rating agencies that will give them the highest rating and supported earlier initiatives by the SEC.4. Authorized investors to bring lawsuits against credit-rating agencies for a reckless failure to get the facts when providing a credit rating.A) 1, 2, 3, and 4.B) 2, 3, 4, and 4.C) none.D) 1, 2, 3, 4, and 4.Answer: DAACSB: Ethical understanding and reasoning10) Which of the following policy measures forced credit-rating agencies to provide reports to the SEC when their employees go to work for a company that has been rated by them in the last twelve months?A) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010B) Sarbanes-Oxley Act of 2002C) Global Legal Settlement of 2002D) Gramm-Leach-Bliley Act of 1999E) Riegle-Neal Act of 1994Answer: AAACSB: Reflective thinking11) Which of the following policy measures created an Office of Credit Ratings at the SEC with its own staff and the authority to fine credit-rating agencies and to deregister an agency if it produces bad ratings?A) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010B) Sarbanes-Oxley Act of 2002C) Global Legal Settlement of 2002D) Gramm-Leach-Bliley Act of 1999E) Riegle-Neal Act of 1994Answer: AAACSB: Reflective thinking12) Which of the following policy measures prohibited compliance officers from being involved in producing or selling credit ratings?A) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010B) Sarbanes-Oxley Act of 2002C) Global Legal Settlement of 2002D) Gramm-Leach-Bliley Act of 1999E) Riegle-Neal Act of 1994Answer: AAACSB: Reflective thinking13) Which of the following policy measures required the SEC to prevent issuers of asset-backed securities from choosing the credit-rating agencies that will give them the highest rating and supported earlier initiatives by the SEC?A) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010B) Sarbanes-Oxley Act of 2002C) Global Legal Settlement of 2002D) Gramm-Leach-Bliley Act of 1999E) Riegle-Neal Act of 1994Answer: AAACSB: Reflective thinking14) Which of the following policy measures authorized investors to bring lawsuits against credit-rating agencies for a reckless failure to get the facts when providing a credit rating?A) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010B) Sarbanes-Oxley Act of 2002C) Global Legal Settlement of 2002D) Gramm-Leach-Bliley Act of 1999E) Riegle-Neal Act of 1994Answer: AAACSB: Reflective thinkingWC 4.6 A Framework for Evaluating Policies to Remedy Conflicts of Interest1) If a conflict of interest existsA) it will always have serious adverse consequences.B) it may not have a serious adverse consequences if the incentive to take advantage of the conflict is low.C) the government needs to step in to pass legislation to remove the conflict.D) there will not be serious adverse consequences, even if the incentive to take advantage of the conflict is low.Answer: BAACSB: Reflective thinking2) If the incentive to take advantage of a conflict of interest is highA) removing the economies of scope that created the conflict may induce higher costs because of the decrease in the flow of reliable information.B) then the government must step in to remove the conflict.C) the costs of non-action in removing the conflict will always be higher than the cost of removing the conflict.D) firms will always step in and work to remove the conflict.Answer: AAACSB: Reflective thinking3) If there isn't sufficient information available, then which of the following approaches to reduce conflicts of interest will have the lowest probability of working?A) leave it to the marketB) supervisory oversightC) separation of functionsD) socialization of information productionAnswer: AAACSB: Reflective thinking4) When the SEC requires companies to publicly release financial statements, which of the following remedies of conflicts of interest does this fall under?A) leave it to the marketB) regulate for transparencyC) supervisory oversightD) separation of functionsAnswer: BAACSB: Analytical thinking5) If firms have an incentive to hide information from mandatory disclosure because the information is proprietary, then which of the following remedies is the least intrusive way to overcome this incentive?A) leave it to the marketB) separation of functionsC) supervisory oversightD) socialization of information productionAnswer: CAACSB: Analytical thinking6) Under the Sarbanes-Oxley Act of 2002, the clause that makes it unlawful for a registered public accounting firm to provide any nonaudit service to a client contemporaneously with an impermissible audit is an example of which remedy of conflicts of interest?A) regulate for transparencyB) supervisory oversightC) separation of functionsD) socialization of information productionAnswer: CAACSB: Analytical thinking7) Of the remedies for conflicts of interest, which one is the most intrusive?A) regulate for transparencyB) separation of functionsC) supervisory oversightD) socialization of information productionAnswer: DAACSB: Analytical thinking8) Under the Global Legal Settlement of 2002, the provision that requires, for a period of five years, brokerage firms to contract with independent research firms to provide information to their customers is an example ofA) regulate for transparency.B) supervisory oversight.C) separation of functions.D) socialization of information production.Answer: DAACSB: Analytical thinking9) Under the Global Legal Settlement of 2002, the provision that requires investment banking firms to make their analysts' recommendations public is an example ofA) regulate for transparency.B) supervisory oversight.C) separation of functions.D) socialization of information production.Answer: AAACSB: Analytical thinking10) Under the Sarbanes-Oxley Act of 2002, the provision that established the PCAOB to supervise accounting firms is an example ofA) regulate for transparency.B) supervisory oversight.C) separation of functions.D) socialization of information production.Answer: BAACSB: Analytical thinking11) Under the Sarbanes-Oxley Act of 2002, the provision that gives more funding to the SEC is an example ofA) regulate for transparency.B) supervisory oversight.C) separation of functions.D) socialization of information production.Answer: BAACSB: Analytical thinking12) Under the Global Legal Settlement of 2002, the provision that requires investment banking firms to sever the link between underwriting and research is an example ofA) regulate for transparency.B) supervisory oversight.C) separation of functions.D) socialization of information production.Answer: CAACSB: Analytical thinking13) The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 did not prohibit companies issuing securities from paying the credit-rating agencies to rate them. This is an example of which remedy of conflicts of interest?A) regulate for transparencyB) supervisory oversightC) leave it to the marketD) socialization of information productionAnswer: CAACSB: Analytical thinking14) The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 authorized investors to bring lawsuits against credit-rating agencies for a reckless failure to get the facts when providing a credit rating. This is an example of which remedy of conflicts of interest?A) regulate for transparencyB) supervisory oversightC) leave it to the marketD) socialization of information productionAnswer: CAACSB: Analytical thinking15) The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created an Office of Credit Ratings at the SEC with its own staff and the authority to fine credit-rating agencies and to deregister an agency if it produces bad ratings. This is an example of which remedy of conflicts of interest?A) regulate for transparencyB) supervisory oversightC) leave it to the marketD) socialization of information productionAnswer: BAACSB: Analytical thinking。
英文版金融第四章
What is the expected return on an Exxon-Mobil bond if the return is 12% two-thirds of the time and 8% one-third of the time? Solution The expected return is 10.68%. Re = p1R1 + p2R2 where p1 = probability of occurrence of return 1 = 2/3 = .67 R1 = return in state 1 = 12% = 0.12 p2 = probability of occurrence return 2 = 1/3 = .33 R2 = return in state 2 = 8% = 0.08 Thus Re = (.67)(0.12) + (.33)(0.08) = 0.1068 = 10.68%
Derivation of Demand Curve How do we know the demand (Bd) at point A is 100 and at point B is 200? Well, we are just making-up those numbers. But we are applying basic economics – more people will want (demand) the bonds if the expected return is higher.
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Derivation of Demand Curve
米什金《货币金融学-英文第12版》PPT课件-第十三章-央行和联邦储备系统
FinanceChapter4 Central Banking and the Conduct of Monetary PolicyCentral BanksThe Money Supply ProcessTools of Monetary PolicyThe Conduct of Monetary Policy: Strategy and TacticsLecture 9Central Banks•Central Banks•Business of Central Banks •Structure of Central Banks •Independence of Central BanksLearning ObjectivesRecognize the historical context of the development of central banks.Describe the key features and functions of central banks.Assess the degree of independence of other major central banks around the world.Recognize policy tools.Central Banks1.1 Central Banks (P306)A central bank is a financial institution given privileged control over the production and distribution of money and credit for a nation or a group of nations. In modern economies, the central bank is usually responsible for the formulation of monetary policy and the regulation of member banks.中央银行是一个金融机构，控制对一个国家或国家集团的货币和信贷的生产和分配的特权。
货币金融学(全英)chapter 4习题PPT教学课件
million per year for twenty years has won $20 million ignores the concept of • A) face value. • B) par value. • C) deflation. • D) discounting the future. • Answer: D
• pared to the situation in which interest rate is 15% and expected inflation rate is 14%, companies are more willing to borrow funds in the situation in which price is stable and interest rate is 2%.
True or false
• 1. a discount bond is bought at a price below its face value and the face value is repaid at the maturity date.
• 2. coupon bond: if p lower than F, yield to maturity lower than coupon rate.
• 5. if interest rate raise from 4%to 5%, the bond holder will be benefit.
米什金 货币金融学 英文版习题答案chapter 4英文习题
Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin) Chapter 4 The Meaning of Interest Rates4.1 Measuring Interest Rates1) The concept of ________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today.A) present valueB) future valueC) interestD) deflationAnswer: AAACSB: Application of Knowledge2) The present value of an expected future payment ________ as the interest rate increases.A) fallsB) risesC) is constantD) is unaffectedAnswer: AAACSB: Reflective Thinking3) An increase in the time to the promised future payment ________ the present value of the payment.A) decreasesB) increasesC) has no effect onD) is irrelevant toAnswer: AAACSB: Reflective Thinking4) With an interest rate of 6 percent, the present value of $100 next year is approximatelyA) $106.B) $100.C) $94.D) $92.Answer: CAACSB: Analytical Thinking5) What is the present value of $500.00 to be paid in two years if the interest rate is 5 percent?A) $453.51B) $500.00C) $476.25D) $550.00Answer: AAACSB: Analytical Thinking6) If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate isA) 5 percent.B) 10 percent.C) 12.5 percent.D) 15 percent.Answer: BAACSB: Analytical Thinking7) To claim that a lottery winner who is to receive $1 million per year for twenty years has won $20 million ignores the process ofA) face value.B) par value.C) deflation.D) discounting the future.Answer: DAACSB: Analytical Thinking8) A credit market instrument that provides the borrower with an amount of funds that must be repaid at the maturity date along with an interest payment is known as aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: AAACSB: Application of Knowledge9) A credit market instrument that requires the borrower to make the same payment every period until the maturity date is known as aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: BAACSB: Application of Knowledge10) Which of the following are TRUE of fixed payment loans?A) The borrower repays both the principal and interest at the maturity date.B) Installment loans and mortgages are frequently of the fixed payment type.C) The borrower pays interest periodically and the principal at the maturity date.D) Commercial loans to businesses are often of this type.Answer: BAACSB: Reflective Thinking11) A fully amortized loan is another name forA) a simple loan.B) a fixed-payment loan.C) a commercial loan.D) an unsecured loan.Answer: BAACSB: Application of Knowledge12) A credit market instrument that pays the owner a fixed coupon payment every year until the maturity date and then repays the face value is called aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: CAACSB: Application of Knowledge13) A ________ pays the owner a fixed coupon payment every year until the maturity date, when the ________ value is repaid.A) coupon bond; discountB) discount bond; discountC) coupon bond; faceD) discount bond; faceAnswer: CAACSB: Analytical Thinking14) The ________ is the final amount that will be paid to the holder of a coupon bond.A) discount valueB) coupon valueC) face valueD) present valueAnswer: CAACSB: Application of Knowledge15) When talking about a coupon bond, face value and ________ mean the same thing.A) par valueB) coupon valueC) amortized valueD) discount valueAnswer: AAACSB: Application of Knowledge16) The dollar amount of the yearly coupon payment expressed as a percentage of the face value of the bond is called the bond'sA) coupon rate.B) maturity rate.C) face value rate.D) payment rate.Answer: AAACSB: Application of Knowledge17) The ________ is calculated by multiplying the coupon rate times the par value of the bond.A) present valueB) face valueC) coupon paymentD) maturity paymentAnswer: CAACSB: Analytical Thinking18) If a $1000 face value coupon bond has a coupon rate of 3.75 percent, then the coupon payment every year isA) $37.50.B) $3.75.C) $375.00.D) $13.75Answer: AAACSB: Analytical Thinking19) If a $5,000 coupon bond has a coupon rate of 13 percent, then the coupon payment every year isA) $650.B) $1,300.C) $130.D) $13.Answer: AAACSB: Analytical Thinking20) An $8,000 coupon bond with a $400 coupon payment every year has a coupon rate ofA) 5 percent.B) 8 percent.C) 10 percent.D) 40 percent.Answer: AAACSB: Analytical Thinking21) A $1000 face value coupon bond with a $60 coupon payment every year has a coupon rate ofA) .6 percent.B) 5 percent.C) 6 percent.D) 10 percent.Answer: CAACSB: Analytical Thinking22) All of the following are examples of coupon bonds EXCEPTA) corporate bonds.B) U.S. Treasury bills.C) U.S. Treasury notes.D) U.S. Treasury bonds.Answer: BAACSB: Analytical Thinking23) A bond that is bought at a price below its face value and the face value is repaid at a maturity date is called aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: DAACSB: Application of Knowledge24) A ________ is bought at a price below its face value, and the ________ value is repaid at the maturity date.A) coupon bond; discountB) discount bond; discountC) coupon bond; faceD) discount bond; faceAnswer: DAACSB: Analytical Thinking25) A discount bondA) pays the bondholder a fixed amount every period and the face value at maturity.B) pays the bondholder the face value at maturity.C) pays all interest and the face value at maturity.D) pays the face value at maturity plus any capital gain.Answer: BAACSB: Reflective Thinking26) Examples of discount bonds includeA) U.S. Treasury bills.B) corporate bonds.C) U.S. Treasury notes.D) municipal bonds.Answer: AAACSB: Analytical Thinking27) Which of the following are TRUE for discount bonds?A) A discount bond is bought at par.B) The purchaser receives the face value of the bond at the maturity date.C) U.S. Treasury bonds and notes are examples of discount bonds.D) The purchaser receives the par value at maturity plus any capital gains.Answer: BAACSB: Reflective Thinking28) The interest rate that equates the present value of payments received from a debt instrument with its value today is theA) simple interest rate.B) current yield.C) yield to maturity.D) real interest rate.Answer: CAACSB: Application of Knowledge29) Economists consider the ________ to be the most accurate measure of interest rates.A) simple interest rate.B) current yield.C) yield to maturity.D) real interest rate.Answer: CAACSB: Reflective Thinking30) For simple loans, the simple interest rate is ________ the yield to maturity.A) greater thanB) less thanC) equal toD) not comparable toAnswer: CAACSB: Application of Knowledge31) If the amount payable in two years is $2420 for a simple loan at 10 percent interest, the loan amount isA) $1000.B) $1210.C) $2000.D) $2200.Answer: CAACSB: Analytical Thinking32) For a 3-year simple loan of $10,000 at 10 percent, the amount to be repaid isA) $10,030.B) $10,300.C) $13,000.D) $13,310.Answer: DAACSB: Analytical Thinking33) If $22,050 is the amount payable in two years for a $20,000 simple loan made today, the interest rate isA) 5 percent.B) 10 percent.C) 22 percent.D) 25 percent.Answer: AAACSB: Analytical Thinking34) If a security pays $110 next year and $121 the year after that, what is its yield to maturity if it sells for $200?A) 9 percentB) 10 percentC) 11 percentD) 12 percentAnswer: BAACSB: Analytical Thinking35) The present value of a fixed-payment loan is calculated as the ________ of the present value of all cash flow payments.A) sumB) differenceC) multipleD) logAnswer: AAACSB: Analytical Thinking36) Which of the following are TRUE for a coupon bond?A) When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate.B) The price of a coupon bond and the yield to maturity are positively related.C) The yield to maturity is greater than the coupon rate when the bond price is above the par value.D) The yield is less than the coupon rate when the bond price is below the par value. Answer: AAACSB: Reflective Thinking37) The ________ of a coupon bond and the yield to maturity are inversely related.A) priceB) par valueC) maturity dateD) termAnswer: AAACSB: Reflective Thinking38) The price of a coupon bond and the yield to maturity are ________ related; that is, as the yield to maturity ________, the price of the bond ________.A) positively; rises; risesB) negatively; falls; fallsC) positively; rises; fallsD) negatively; rises; fallsAnswer: DAACSB: Reflective Thinking39) The yield to maturity is ________ than the ________ rate when the bond price is ________ its face value.A) greater; coupon; aboveB) greater; coupon; belowC) greater; perpetuity; aboveD) less; perpetuity; belowAnswer: BAACSB: Reflective Thinking40) The ________ is below the coupon rate when the bond price is ________ its par value.A) yield to maturity; aboveB) yield to maturity; belowC) discount rate; aboveD) discount rate; belowAnswer: AAACSB: Reflective Thinking41) A $10,000 8 percent coupon bond that sells for $10,000 has a yield to maturity ofA) 8 percent.B) 10 percent.C) 12 percent.D) 14 percent.Answer: AAACSB: Analytical Thinking42) Which of the following $1,000 face-value securities has the highest yield to maturity?A) a 5 percent coupon bond selling for $1,000B) a 10 percent coupon bond selling for $1,000C) a 12 percent coupon bond selling for $1,000D) a 12 percent coupon bond selling for $1,100Answer: CAACSB: Analytical Thinking43) Which of the following $5,000 face-value securities has the highest yield to maturity?A) a 6 percent coupon bond selling for $5,000B) a 6 percent coupon bond selling for $5,500C) a 10 percent coupon bond selling for $5,000D) a 12 percent coupon bond selling for $4,500Answer: DAACSB: Analytical Thinking44) Which of the following $1,000 face-value securities has the highest yield to maturity?A) a 5 percent coupon bond with a price of $600B) a 5 percent coupon bond with a price of $800C) a 5 percent coupon bond with a price of $1,000D) a 5 percent coupon bond with a price of $1,200Answer: AAACSB: Analytical Thinking45) Which of the following $1,000 face-value securities has the lowest yield to maturity?A) a 5 percent coupon bond selling for $1,000B) a 10 percent coupon bond selling for $1,000C) a 15 percent coupon bond selling for $1,000D) a 15 percent coupon bond selling for $900Answer: AAACSB: Analytical Thinking46) Which of the following bonds would you prefer to be buying?A) a $10,000 face-value security with a 10 percent coupon selling for $9,000B) a $10,000 face-value security with a 7 percent coupon selling for $10,000C) a $10,000 face-value security with a 9 percent coupon selling for $10,000D) a $10,000 face-value security with a 10 percent coupon selling for $10,000 Answer: AAACSB: Analytical Thinking47) A coupon bond that has no maturity date and no repayment of principal is called a。
货币金融学chapter 4英文习题
Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin) Chapter 4 The Meaning of Interest Rates4.1 Measuring Interest Rates1) The concept of ________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today.A) present valueB) future valueC) interestD) deflationAnswer: AAACSB: Application of Knowledge2) The present value of an expected future payment ________ as the interest rate increases.A) fallsB) risesC) is constantD) is unaffectedAnswer: AAACSB: Reflective Thinking3) An increase in the time to the promised future payment ________ the present value of the payment.A) decreasesB) increasesC) has no effect onD) is irrelevant toAnswer: AAACSB: Reflective Thinking4) With an interest rate of 6 percent, the present value of $100 next year is approximatelyA) $106.B) $100.C) $94.D) $92.Answer: CAACSB: Analytical Thinking5) What is the present value of $500.00 to be paid in two years if the interest rate is 5 percent?A) $453.51B) $500.00C) $476.25D) $550.00Answer: AAACSB: Analytical Thinking6) If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate isA) 5 percent.B) 10 percent.C) 12.5 percent.D) 15 percent.Answer: BAACSB: Analytical Thinking7) To claim that a lottery winner who is to receive $1 million per year for twenty years has won $20 million ignores the process ofA) face value.B) par value.C) deflation.D) discounting the future.Answer: DAACSB: Analytical Thinking8) A credit market instrument that provides the borrower with an amount of funds that must be repaid at the maturity date along with an interest payment is known as aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: AAACSB: Application of Knowledge9) A credit market instrument that requires the borrower to make the same payment every period until the maturity date is known as aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: BAACSB: Application of Knowledge10) Which of the following are TRUE of fixed payment loans?A) The borrower repays both the principal and interest at the maturity date.B) Installment loans and mortgages are frequently of the fixed payment type.C) The borrower pays interest periodically and the principal at the maturity date.D) Commercial loans to businesses are often of this type.Answer: BAACSB: Reflective Thinking11) A fully amortized loan is another name forA) a simple loan.B) a fixed-payment loan.C) a commercial loan.D) an unsecured loan.Answer: BAACSB: Application of Knowledge12) A credit market instrument that pays the owner a fixed coupon payment every year until the maturity date and then repays the face value is called aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: CAACSB: Application of Knowledge13) A ________ pays the owner a fixed coupon payment every year until the maturity date, when the ________ value is repaid.A) coupon bond; discountB) discount bond; discountC) coupon bond; faceD) discount bond; faceAnswer: CAACSB: Analytical Thinking14) The ________ is the final amount that will be paid to the holder of a coupon bond.A) discount valueB) coupon valueC) face valueD) present valueAnswer: CAACSB: Application of Knowledge15) When talking about a coupon bond, face value and ________ mean the same thing.A) par valueB) coupon valueC) amortized valueD) discount valueAnswer: AAACSB: Application of Knowledge16) The dollar amount of the yearly coupon payment expressed as a percentage of the face value of the bond is called the bond'sA) coupon rate.B) maturity rate.C) face value rate.D) payment rate.Answer: AAACSB: Application of Knowledge17) The ________ is calculated by multiplying the coupon rate times the par value of the bond.A) present valueB) face valueC) coupon paymentD) maturity paymentAnswer: CAACSB: Analytical Thinking18) If a $1000 face value coupon bond has a coupon rate of 3.75 percent, then the coupon payment every year isA) $37.50.B) $3.75.C) $375.00.D) $13.75Answer: AAACSB: Analytical Thinking19) If a $5,000 coupon bond has a coupon rate of 13 percent, then the coupon payment every year isA) $650.B) $1,300.C) $130.D) $13.Answer: AAACSB: Analytical Thinking20) An $8,000 coupon bond with a $400 coupon payment every year has a coupon rate ofA) 5 percent.B) 8 percent.C) 10 percent.D) 40 percent.Answer: AAACSB: Analytical Thinking21) A $1000 face value coupon bond with a $60 coupon payment every year has a coupon rate ofA) .6 percent.B) 5 percent.C) 6 percent.D) 10 percent.Answer: CAACSB: Analytical Thinking22) All of the following are examples of coupon bonds EXCEPTA) corporate bonds.B) U.S. Treasury bills.C) U.S. Treasury notes.D) U.S. Treasury bonds.Answer: BAACSB: Analytical Thinking23) A bond that is bought at a price below its face value and the face value is repaid at a maturity date is called aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: DAACSB: Application of Knowledge24) A ________ is bought at a price below its face value, and the ________ value is repaid at the maturity date.A) coupon bond; discountB) discount bond; discountC) coupon bond; faceD) discount bond; faceAnswer: DAACSB: Analytical Thinking25) A discount bondA) pays the bondholder a fixed amount every period and the face value at maturity.B) pays the bondholder the face value at maturity.C) pays all interest and the face value at maturity.D) pays the face value at maturity plus any capital gain.Answer: BAACSB: Reflective Thinking26) Examples of discount bonds includeA) U.S. Treasury bills.B) corporate bonds.C) U.S. Treasury notes.D) municipal bonds.Answer: AAACSB: Analytical Thinking27) Which of the following are TRUE for discount bonds?A) A discount bond is bought at par.B) The purchaser receives the face value of the bond at the maturity date.C) U.S. Treasury bonds and notes are examples of discount bonds.D) The purchaser receives the par value at maturity plus any capital gains.Answer: BAACSB: Reflective Thinking28) The interest rate that equates the present value of payments received from a debt instrument with its value today is theA) simple interest rate.B) current yield.C) yield to maturity.D) real interest rate.Answer: CAACSB: Application of Knowledge29) Economists consider the ________ to be the most accurate measure of interest rates.A) simple interest rate.B) current yield.C) yield to maturity.D) real interest rate.Answer: CAACSB: Reflective Thinking30) For simple loans, the simple interest rate is ________ the yield to maturity.A) greater thanB) less thanC) equal toD) not comparable toAnswer: CAACSB: Application of Knowledge31) If the amount payable in two years is $2420 for a simple loan at 10 percent interest, the loan amount isA) $1000.B) $1210.C) $2000.D) $2200.Answer: CAACSB: Analytical Thinking32) For a 3-year simple loan of $10,000 at 10 percent, the amount to be repaid isA) $10,030.B) $10,300.C) $13,000.D) $13,310.Answer: DAACSB: Analytical Thinking33) If $22,050 is the amount payable in two years for a $20,000 simple loan made today, the interest rate isA) 5 percent.B) 10 percent.C) 22 percent.D) 25 percent.Answer: AAACSB: Analytical Thinking34) If a security pays $110 next year and $121 the year after that, what is its yield to maturity if it sells for $200?A) 9 percentB) 10 percentC) 11 percentD) 12 percentAnswer: BAACSB: Analytical Thinking35) The present value of a fixed-payment loan is calculated as the ________ of the present value of all cash flow payments.A) sumB) differenceC) multipleD) logAnswer: AAACSB: Analytical Thinking36) Which of the following are TRUE for a coupon bond?A) When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate.B) The price of a coupon bond and the yield to maturity are positively related.C) The yield to maturity is greater than the coupon rate when the bond price is above the par value.D) The yield is less than the coupon rate when the bond price is below the par value. Answer: AAACSB: Reflective Thinking37) The ________ of a coupon bond and the yield to maturity are inversely related.A) priceB) par valueC) maturity dateD) termAnswer: AAACSB: Reflective Thinking38) The price of a coupon bond and the yield to maturity are ________ related; that is, as the yield to maturity ________, the price of the bond ________.A) positively; rises; risesB) negatively; falls; fallsC) positively; rises; fallsD) negatively; rises; fallsAnswer: DAACSB: Reflective Thinking39) The yield to maturity is ________ than the ________ rate when the bond price is ________ its face value.A) greater; coupon; aboveB) greater; coupon; belowC) greater; perpetuity; aboveD) less; perpetuity; belowAnswer: BAACSB: Reflective Thinking40) The ________ is below the coupon rate when the bond price is ________ its par value.A) yield to maturity; aboveB) yield to maturity; belowC) discount rate; aboveD) discount rate; belowAnswer: AAACSB: Reflective Thinking41) A $10,000 8 percent coupon bond that sells for $10,000 has a yield to maturity ofA) 8 percent.B) 10 percent.C) 12 percent.D) 14 percent.Answer: AAACSB: Analytical Thinking42) Which of the following $1,000 face-value securities has the highest yield to maturity?A) a 5 percent coupon bond selling for $1,000B) a 10 percent coupon bond selling for $1,000C) a 12 percent coupon bond selling for $1,000D) a 12 percent coupon bond selling for $1,100Answer: CAACSB: Analytical Thinking43) Which of the following $5,000 face-value securities has the highest yield to maturity?A) a 6 percent coupon bond selling for $5,000B) a 6 percent coupon bond selling for $5,500C) a 10 percent coupon bond selling for $5,000D) a 12 percent coupon bond selling for $4,500Answer: DAACSB: Analytical Thinking44) Which of the following $1,000 face-value securities has the highest yield to maturity?A) a 5 percent coupon bond with a price of $600B) a 5 percent coupon bond with a price of $800C) a 5 percent coupon bond with a price of $1,000D) a 5 percent coupon bond with a price of $1,200Answer: AAACSB: Analytical Thinking45) Which of the following $1,000 face-value securities has the lowest yield to maturity?A) a 5 percent coupon bond selling for $1,000B) a 10 percent coupon bond selling for $1,000C) a 15 percent coupon bond selling for $1,000D) a 15 percent coupon bond selling for $900Answer: AAACSB: Analytical Thinking46) Which of the following bonds would you prefer to be buying?A) a $10,000 face-value security with a 10 percent coupon selling for $9,000B) a $10,000 face-value security with a 7 percent coupon selling for $10,000C) a $10,000 face-value security with a 9 percent coupon selling for $10,000D) a $10,000 face-value security with a 10 percent coupon selling for $10,000 Answer: AAACSB: Analytical Thinking47) A coupon bond that has no maturity date and no repayment of principal is called aA) consol.B) cabinet.C) Treasury bill.D) Treasury note.Answer: AAACSB: Application of Knowledge48) The price of a consol equals the coupon paymentA) times the interest rate.B) plus the interest rate.C) minus the interest rate.D) divided by the interest rate.Answer: DAACSB: Analytical Thinking49) The interest rate on a consol equals theA) price times the coupon payment.B) price divided by the coupon payment.C) coupon payment plus the price.D) coupon payment divided by the price.Answer: DAACSB: Analytical Thinking50) A consol paying $20 annually when the interest rate is 5 percent has a price ofA) $100.B) $200.C) $400.D) $800.Answer: CAACSB: Analytical Thinking51) If a perpetuity has a price of $500 and an annual interest payment of $25, the interest rate isA) 2.5 percent.B) 5 percent.C) 7.5 percent.D) 10 percent.Answer: BAACSB: Analytical Thinking52) The yield to maturity for a perpetuity is a useful approximation for the yield to maturity on long-term coupon bonds. It is called the ________ when approximating the yield for a coupon bond.A) current yieldB) discount yieldC) future yieldD) star yieldAnswer: AAACSB: Reflective Thinking53) The yield to maturity for a one-year discount bond equals the increase in price over the year, divided by theA) initial price.B) face value.C) interest rate.D) coupon rate.Answer: AAACSB: Analytical Thinking54) If a $10,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity isA) 5 percent.B) 10 percent.C) 50 percent.D) 100 percent.Answer: DAACSB: Analytical Thinking55) If a $5,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity isA) 0 percent.B) 5 percent.C) 10 percent.D) 20 percent.Answer: AAACSB: Analytical Thinking56) A discount bond selling for $15,000 with a face value of $20,000 in one year has a yield to maturity ofA) 3 percent.B) 20 percent.C) 25 percent.D) 33.3 percent.Answer: DAACSB: Analytical Thinking57) The yield to maturity for a discount bond is ________ related to the current bond price.A) negativelyB) positivelyC) notD) directlyAnswer: AAACSB: Reflective Thinking58) A discount bond is also called a ________ because the owner does not receive periodic payments.A) zero-coupon bondB) municipal bondC) corporate bondD) consolAnswer: AAACSB: Application of Knowledge59) Another name for a consol is a ________ because it is a bond with no maturity date. The owner receives fixed coupon payments forever.A) perpetuityB) discount bondC) municipalityD) high-yield bondAnswer: AAACSB: Application of Knowledge60) If the interest rate is 5%, what is the present value of a security that pays you $1, 050 next year and $1,102.50 two years from now? If this security sold for $2200, is the yield to maturity greater or less than 5%? Why?Answer: PV = $1,050/(1. +.05) + $1,102.50/(1 + 0.5)2PV = $2,000If this security sold for $2200, the yield to maturity is less than 5%. The lower the interest rate the higher the present value.AACSB: Analytical Thinking4.2 The Distinction Between Interest Rates and Returns1) The ________ is defined as the payments to the owner plus the change in a security's value expressed as a fraction of the security's purchase price.A) yield to maturityB) current yieldC) rate of returnD) yield rateAnswer: CAACSB: Application of Knowledge2) Which of the following are TRUE concerning the distinction between interest rates and returns?A) The rate of return on a bond will not necessarily equal the interest rate on that bond.B) The return can be expressed as the difference between the current yield and the rate of capital gains.C) The rate of return will be greater than the interest rate when the price of the bond falls during the holding period.D) The return can be expressed as the sum of the discount yield and the rate of capital gains. Answer: AAACSB: Reflective Thinking3) The sum of the current yield and the rate of capital gain is called theA) rate of return.B) discount yield.C) perpetuity yield.D) par value.Answer: AAACSB: Analytical Thinking4) What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $1,200 next year?A) 5 percentB) 10 percentC) -5 percentD) 25 percentAnswer: DAACSB: Analytical Thinking5) What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $900 next year?A) 5 percentB) 10 percentC) -5 percentD) -10 percentAnswer: CAACSB: Analytical Thinking6) The return on a 5 percent coupon bond that initially sells for $1,000 and sells for $950 next year isA) -10 percent.B) -5 percent.C) 0 percent.D) 5 percent.Answer: CAACSB: Analytical Thinking7) Suppose you are holding a 5 percent coupon bond maturing in one year with a yield to maturity of 15 percent. If the interest rate on one-year bonds rises from 15 percent to 20 percent over the course of the year, what is the yearly return on the bond you are holding?A) 5 percentB) 10 percentC) 15 percentD) 20 percentAnswer: CAACSB: Analytical Thinking8) I purchase a 10 percent coupon bond. Based on my purchase price, I calculate a yield to maturity of 8 percent. If I hold this bond to maturity, then my return on this asset isA) 10 percent.B) 8 percent.C) 12 percent.D) there is not enough information to determine the return.Answer: BAACSB: Analytical Thinking9) If the interest rates on all bonds rise from 5 to 6 percent over the course of the year, which bond would you prefer to have been holding?A) a bond with one year to maturityB) a bond with five years to maturityC) a bond with ten years to maturityD) a bond with twenty years to maturityAnswer: AAACSB: Analytical Thinking10) An equal decrease in all bond interest ratesA) increases the price of a five-year bond more than the price of a ten-year bond.B) increases the price of a ten-year bond more than the price of a five-year bond.C) decreases the price of a five-year bond more than the price of a ten-year bond.D) decreases the price of a ten-year bond more than the price of a five-year bond.Answer: BAACSB: Analytical Thinking11) An equal increase in all bond interest ratesA) increases the return to all bond maturities by an equal amount.B) decreases the return to all bond maturities by an equal amount.C) has no effect on the returns to bonds.D) decreases long-term bond returns more than short-term bond returns.Answer: DAACSB: Analytical Thinking12) Which of the following are generally TRUE of bonds?A) A bond's return equals the yield to maturity when the time to maturity is the same as the holding period.B) A rise in interest rates is associated with a fall in bond prices, resulting in capital gains on bonds whose terms to maturity are longer than the holding periods.C) The longer a bond's maturity, the smaller is the size of the price change associated with an interest rate change.D) Prices and returns for short-term bonds are more volatile than those for longer-term bonds. Answer: AAACSB: Reflective Thinking13) Which of the following are generally TRUE of all bonds?A) The longer a bond's maturity, the greater is the rate of return that occurs as a result of the increase in the interest rate.B) Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise.C) Prices and returns for short-term bonds are more volatile than those for longer term bonds.D) A fall in interest rates results in capital losses for bonds whose terms to maturity are longer than the holding period.Answer: BAACSB: Reflective Thinking14) The riskiness of an asset's returns due to changes in interest rates isA) exchange-rate risk.B) price risk.C) asset risk.D) interest-rate risk.Answer: DAACSB: Application of Knowledge15) Interest-rate risk is the riskiness of an asset's returns due toA) interest-rate changes.B) changes in the coupon rate.C) default of the borrower.D) changes in the asset's maturity.Answer: AAACSB: Application of Knowledge16) Prices and returns for ________ bonds are more volatile than those for ________ bonds, everything else held constant.A) long-term; long-termB) long-term; short-termC) short-term; long-termD) short-term; short-termAnswer: BAACSB: Reflective Thinking7) There is ________ for any bond whose time to maturity matches the holding period.A) no interest-rate riskB) a large interest-rate riskC) rate-of-return riskD) yield-to-maturity riskAnswer: AAACSB: Analytical Thinking18) All bonds that will not be held to maturity have interest rate risk which occurs because of the change in the price of the bond as a result ofA) interest-rate changes.B) changes in the coupon rate.C) default of the borrower.D) changes in the asset's maturity date.Answer: AAACSB: Application of Knowledge19) Your favorite uncle advises you to purchase long-term bonds because their interest rate is 10%. Should you follow his advice?Answer: It depends on where you think interest rates are headed in the future. If you think interest rates will be going up, you should not follow your uncle's advice because you would then have to discount your bond if you needed to sell it before the maturity date. Long-term bonds have a greater interest-rate risk.AACSB: Reflective Thinking4.3 The Distinction Between Real and Nominal Interest Rates1) The ________ interest rate is adjusted for expected changes in the price level.A) ex ante realB) ex post realC) ex post nominalD) ex ante nominalAnswer: AAACSB: Application of Knowledge2) The ________ interest rate more accurately reflects the true cost of borrowing.A) nominalB) realC) discountD) marketAnswer: BAACSB: Analytical Thinking3) The nominal interest rate minus the expected rate of inflationA) defines the real interest rate.B) is a less accurate measure of the incentives to borrow and lend than is the nominal interest rate.C) is a less accurate indicator of the tightness of credit market conditions than is the nominal interest rate.D) defines the discount rate.Answer: AAACSB: Analytical Thinking4) When the ________ interest rate is low, there are greater incentives to ________ and fewer incentives to ________.A) nominal; lend; borrowB) real; lend; borrowC) real; borrow; lendD) market; lend; borrowAnswer: CAACSB: Reflective Thinking5) The interest rate that describes how well a lender has done in real terms after the fact is called theA) ex post real interest rate.B) ex ante real interest rate.C) ex post nominal interest rate.D) ex ante nominal interest rate.Answer: AAACSB: Analytical Thinking6) The ________ states that the nominal interest rate equals the real interest rate plus the expected rate of inflation.A) Fisher equationB) Keynesian equationC) Monetarist equationD) Marshall equationAnswer: AAACSB: Application of Knowledge7) If the nominal rate of interest is 2 percent, and the expected inflation rate is -10 percent, the real rate of interest isA) 2 percent.B) 8 percent.C) 10 percent.D) 12 percent.Answer: DAACSB: Analytical Thinking8) In which of the following situations would you prefer to be the lender?A) The interest rate is 9 percent and the expected inflation rate is 7 percent.B) The interest rate is 4 percent and the expected inflation rate is 1 percent.C) The interest rate is 13 percent and the expected inflation rate is 15 percent.D) The interest rate is 25 percent and the expected inflation rate is 50 percent.Answer: BAACSB: Analytical Thinking9) In which of the following situations would you prefer to be the borrower?A) The interest rate is 9 percent and the expected inflation rate is 7 percent.B) The interest rate is 4 percent and the expected inflation rate is 1 percent.C) The interest rate is 13 percent and the expected inflation rate is 15 percent.D) The interest rate is 25 percent and the expected inflation rate is 50 percent.Answer: DAACSB: Analytical Thinking10) If you expect the inflation rate to be 15 percent next year and a one-year bond has a yield to maturity of 7 percent, then the real interest rate on this bond isA) 7 percent.B) 22 percent.C) -15 percent.D) -8 percent.Answer: DAACSB: Analytical Thinking11) If you expect the inflation rate to be 12 percent next year and a one-year bond has a yield to maturity of 7 percent, then the real interest rate on this bond isA) -5 percent.B) -2 percent.C) 2 percent.D) 12 percent.Answer: AAACSB: Analytical Thinking12) If you expect the inflation rate to be 4 percent next year and a one year bond has a yield to maturity of 7 percent, then the real interest rate on this bond isA) -3 percent.B) -2 percent.C) 3 percent.D) 7 percent.Answer: CAACSB: Analytical Thinking13) In the United States during the late 1970s, the nominal interest rates were quite high, but the real interest rates were negative. From the Fisher equation, we can conclude that expected inflation in the United States during this period wasA) irrelevant.B) low.C) negative.D) high.Answer: DAACSB: Reflective Thinking14) The interest rate on Treasury Inflation Indexed Securities can be roughly interpreted asA) the real interest rate.B) the nominal interest rate.C) the rate of inflation.D) the rate of deflation.Answer: AAACSB: Analytical Thinking15) Assuming the same coupon rate and maturity length, the difference between the yield on a Treasury Inflation Indexed Security and the yield on a nonindexed Treasury security provides insight intoA) the nominal interest rate.B) the real interest rate.C) the nominal exchange rate.D) the expected inflation rate.Answer: DAACSB: Analytical Thinking16) Assuming the same coupon rate and maturity length, when the interest rate on a Treasury Inflation Indexed Security is 3 percent, and the yield on a nonindexed Treasury bond is 8 percent, the expected rate of inflation isA) 3 percent.B) 5 percent.C) 8 percent.D) 11 percent.Answer: BAACSB: Analytical Thinking17) Would it make sense to buy a house when mortgage rates are 14% and expected inflation is 15%? Explain your answer.Answer: Even though the nominal rate for the mortgage appears high, the real cost of borrowing the funds is -1%. Yes, under this circumstance it would be reasonable to make this purchase.AACSB: Reflective Thinking4.4 Web Appendix: Measuring Interest-Rate Risk: Duration1) Duration isA) an asset's term to maturity.B) the time until the next interest payment for a coupon bond.C) the average lifetime of a debt security's stream of payments.D) the time between interest payments for a coupon bond.Answer: CAACSB: Application of Knowledge2) Comparing a discount bond and a coupon bond with the same maturityA) the coupon bond has the greater effective maturity.B) the discount bond has the greater effective maturity.C) the effective maturity cannot be calculated for a coupon bond.D) the effective maturity cannot be calculated for a discount bond.Answer: BAACSB: Reflective Thinking3) The duration of a coupon bond increasesA) the longer is the bond's term to maturity.B) when interest rates increase.C) the higher the coupon rate on the bond.D) the higher the bond price.Answer: AAACSB: Reflective Thinking4) All else equal, when interest rates ________, the duration of a coupon bond ________.A) rise; fallsB) rise; increasesC) falls; fallsD) falls; does not changeAnswer: AAACSB: Reflective Thinking5) All else equal, the ________ the coupon rate on a bond, the ________ the bond's duration.A) higher; longerB) higher; shorterC) lower; shorterD) greater; longerAnswer: BAACSB: Reflective Thinking。
货币金融学(全英)chapter 4习题
• 16.if the present value of security is $150 which interest payment is $55 next year and you will get $133 in the end of third year, the interest rate is ( )
• B next year$6m, and every year$4m in next 4 year after that
• C every year be paid $1m, the last year be paid $6
• D above forms have the same present value
• 5. if interest rate raise from 4%to 5%, the bond holder will be benefit.
• 6. if all kinds of bond’s interest rate decrease from8% to 6% in one year’s time, you prefer bonds with longer maturities.
Choose the best answer
• 1. the present value of security that interest payment is $52.5 next year and $110.25 the second year, interest rate is 5%
• A $162.5 • B $50 • C $100 • D $150 •d
• A 4% • B5% • C6% • D7% •c • 21. which has the lowest yield to maturity of the following
货币金融学 第四章 chapter-4 英文习题
Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin) Chapter 4 The Meaning of Interest Rates4.1 Measuring Interest Rates1) The concept of ________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today.A) present valueB) future valueC) interestD) deflationAnswer: AAACSB: Application of Knowledge2) The present value of an expected future payment ________ as the interest rate increases.A) fallsB) risesC) is constantD) is unaffectedAnswer: AAACSB: Reflective Thinking3) An increase in the time to the promised future payment ________ the present value of the payment.A) decreasesB) increasesC) has no effect onD) is irrelevant toAnswer: AAACSB: Reflective Thinking4) With an interest rate of 6 percent, the present value of $100 next year is approximatelyA) $106.B) $100.C) $94.D) $92.Answer: CAACSB: Analytical Thinking5) What is the present value of $500.00 to be paid in two years if the interest rate is 5 percent?A) $453.51B) $500.00C) $476.25D) $550.00Answer: AAACSB: Analytical Thinking6) If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate isA) 5 percent.B) 10 percent.C) 12.5 percent.D) 15 percent.Answer: BAACSB: Analytical Thinking7) To claim that a lottery winner who is to receive $1 million per year for twenty years has won $20 million ignores the process ofA) face value.B) par value.C) deflation.D) discounting the future.Answer: DAACSB: Analytical Thinking8) A credit market instrument that provides the borrower with an amount of funds that must be repaid at the maturity date along with an interest payment is known as aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: AAACSB: Application of Knowledge9) A credit market instrument that requires the borrower to make the same payment every period until the maturity date is known as aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: BAACSB: Application of Knowledge10) Which of the following are TRUE of fixed payment loans?A) The borrower repays both the principal and interest at the maturity date.B) Installment loans and mortgages are frequently of the fixed payment type.C) The borrower pays interest periodically and the principal at the maturity date.D) Commercial loans to businesses are often of this type.Answer: BAACSB: Reflective Thinking11) A fully amortized loan is another name forA) a simple loan.B) a fixed-payment loan.C) a commercial loan.D) an unsecured loan.Answer: BAACSB: Application of Knowledge12) A credit market instrument that pays the owner a fixed coupon payment every year until the maturity date and then repays the face value is called aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: CAACSB: Application of Knowledge13) A ________ pays the owner a fixed coupon payment every year until the maturity date, when the ________ value is repaid.A) coupon bond; discountB) discount bond; discountC) coupon bond; faceD) discount bond; faceAnswer: CAACSB: Analytical Thinking14) The ________ is the final amount that will be paid to the holder of a coupon bond.A) discount valueB) coupon valueC) face valueD) present valueAnswer: CAACSB: Application of Knowledge15) When talking about a coupon bond, face value and ________ mean the same thing.A) par valueB) coupon valueC) amortized valueD) discount valueAnswer: AAACSB: Application of Knowledge16) The dollar amount of the yearly coupon payment expressed as a percentage of the face value of the bond is called the bond'sA) coupon rate.B) maturity rate.C) face value rate.D) payment rate.Answer: AAACSB: Application of Knowledge17) The ________ is calculated by multiplying the coupon rate times the par value of the bond.A) present valueB) face valueC) coupon paymentD) maturity paymentAnswer: CAACSB: Analytical Thinking18) If a $1000 face value coupon bond has a coupon rate of 3.75 percent, then the coupon payment every year isA) $37.50.B) $3.75.C) $375.00.D) $13.75Answer: AAACSB: Analytical Thinking19) If a $5,000 coupon bond has a coupon rate of 13 percent, then the coupon payment every year isA) $650.B) $1,300.C) $130.D) $13.Answer: AAACSB: Analytical Thinking20) An $8,000 coupon bond with a $400 coupon payment every year has a coupon rate ofA) 5 percent.B) 8 percent.C) 10 percent.D) 40 percent.Answer: AAACSB: Analytical Thinking21) A $1000 face value coupon bond with a $60 coupon payment every year has a coupon rate ofA) .6 percent.B) 5 percent.C) 6 percent.D) 10 percent.Answer: CAACSB: Analytical Thinking22) All of the following are examples of coupon bonds EXCEPTA) corporate bonds.B) U.S. Treasury bills.C) U.S. Treasury notes.D) U.S. Treasury bonds.Answer: BAACSB: Analytical Thinking23) A bond that is bought at a price below its face value and the face value is repaid at a maturity date is called aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: DAACSB: Application of Knowledge24) A ________ is bought at a price below its face value, and the ________ value is repaid at the maturity date.A) coupon bond; discountB) discount bond; discountC) coupon bond; faceD) discount bond; faceAnswer: DAACSB: Analytical Thinking25) A discount bondA) pays the bondholder a fixed amount every period and the face value at maturity.B) pays the bondholder the face value at maturity.C) pays all interest and the face value at maturity.D) pays the face value at maturity plus any capital gain.Answer: BAACSB: Reflective Thinking26) Examples of discount bonds includeA) U.S. Treasury bills.B) corporate bonds.C) U.S. Treasury notes.D) municipal bonds.Answer: AAACSB: Analytical Thinking27) Which of the following are TRUE for discount bonds?A) A discount bond is bought at par.B) The purchaser receives the face value of the bond at the maturity date.C) U.S. Treasury bonds and notes are examples of discount bonds.D) The purchaser receives the par value at maturity plus any capital gains.Answer: BAACSB: Reflective Thinking28) The interest rate that equates the present value of payments received from a debt instrument with its value today is theA) simple interest rate.B) current yield.C) yield to maturity.D) real interest rate.Answer: CAACSB: Application of Knowledge29) Economists consider the ________ to be the most accurate measure of interest rates.A) simple interest rate.B) current yield.C) yield to maturity.D) real interest rate.Answer: CAACSB: Reflective Thinking30) For simple loans, the simple interest rate is ________ the yield to maturity.A) greater thanB) less thanC) equal toD) not comparable toAnswer: CAACSB: Application of Knowledge31) If the amount payable in two years is $2420 for a simple loan at 10 percent interest, the loan amount isA) $1000.B) $1210.C) $2000.D) $2200.Answer: CAACSB: Analytical Thinking32) For a 3-year simple loan of $10,000 at 10 percent, the amount to be repaid isA) $10,030.B) $10,300.C) $13,000.D) $13,310.Answer: DAACSB: Analytical Thinking33) If $22,050 is the amount payable in two years for a $20,000 simple loan made today, the interest rate isA) 5 percent.B) 10 percent.C) 22 percent.D) 25 percent.Answer: AAACSB: Analytical Thinking34) If a security pays $110 next year and $121 the year after that, what is its yield to maturity if it sells for $200?A) 9 percentB) 10 percentC) 11 percentD) 12 percentAnswer: BAACSB: Analytical Thinking35) The present value of a fixed-payment loan is calculated as the ________ of the present value of all cash flow payments.A) sumB) differenceC) multipleD) logAnswer: AAACSB: Analytical Thinking36) Which of the following are TRUE for a coupon bond?A) When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate.B) The price of a coupon bond and the yield to maturity are positively related.C) The yield to maturity is greater than the coupon rate when the bond price is above the par value.D) The yield is less than the coupon rate when the bond price is below the par value. Answer: AAACSB: Reflective Thinking37) The ________ of a coupon bond and the yield to maturity are inversely related.A) priceB) par valueC) maturity dateD) termAnswer: AAACSB: Reflective Thinking38) The price of a coupon bond and the yield to maturity are ________ related; that is, as the yield to maturity ________, the price of the bond ________.A) positively; rises; risesB) negatively; falls; fallsC) positively; rises; fallsD) negatively; rises; fallsAnswer: DAACSB: Reflective Thinking39) The yield to maturity is ________ than the ________ rate when the bond price is ________ its face value.A) greater; coupon; aboveB) greater; coupon; belowC) greater; perpetuity; aboveD) less; perpetuity; belowAnswer: BAACSB: Reflective Thinking40) The ________ is below the coupon rate when the bond price is ________ its par value.A) yield to maturity; aboveB) yield to maturity; belowC) discount rate; aboveD) discount rate; belowAnswer: AAACSB: Reflective Thinking41) A $10,000 8 percent coupon bond that sells for $10,000 has a yield to maturity ofA) 8 percent.B) 10 percent.C) 12 percent.D) 14 percent.Answer: AAACSB: Analytical Thinking42) Which of the following $1,000 face-value securities has the highest yield to maturity?A) a 5 percent coupon bond selling for $1,000B) a 10 percent coupon bond selling for $1,000C) a 12 percent coupon bond selling for $1,000D) a 12 percent coupon bond selling for $1,100Answer: CAACSB: Analytical Thinking43) Which of the following $5,000 face-value securities has the highest yield to maturity?A) a 6 percent coupon bond selling for $5,000B) a 6 percent coupon bond selling for $5,500C) a 10 percent coupon bond selling for $5,000D) a 12 percent coupon bond selling for $4,500Answer: DAACSB: Analytical Thinking44) Which of the following $1,000 face-value securities has the highest yield to maturity?A) a 5 percent coupon bond with a price of $600B) a 5 percent coupon bond with a price of $800C) a 5 percent coupon bond with a price of $1,000D) a 5 percent coupon bond with a price of $1,200Answer: AAACSB: Analytical Thinking45) Which of the following $1,000 face-value securities has the lowest yield to maturity?A) a 5 percent coupon bond selling for $1,000B) a 10 percent coupon bond selling for $1,000C) a 15 percent coupon bond selling for $1,000D) a 15 percent coupon bond selling for $900Answer: AAACSB: Analytical Thinking46) Which of the following bonds would you prefer to be buying?A) a $10,000 face-value security with a 10 percent coupon selling for $9,000B) a $10,000 face-value security with a 7 percent coupon selling for $10,000C) a $10,000 face-value security with a 9 percent coupon selling for $10,000D) a $10,000 face-value security with a 10 percent coupon selling for $10,000 Answer: AAACSB: Analytical Thinking47) A coupon bond that has no maturity date and no repayment of principal is called aA) consol.B) cabinet.C) Treasury bill.D) Treasury note.Answer: AAACSB: Application of Knowledge48) The price of a consol equals the coupon paymentA) times the interest rate.B) plus the interest rate.C) minus the interest rate.D) divided by the interest rate.Answer: DAACSB: Analytical Thinking49) The interest rate on a consol equals theA) price times the coupon payment.B) price divided by the coupon payment.C) coupon payment plus the price.D) coupon payment divided by the price.Answer: DAACSB: Analytical Thinking50) A consol paying $20 annually when the interest rate is 5 percent has a price ofA) $100.B) $200.C) $400.D) $800.Answer: CAACSB: Analytical Thinking51) If a perpetuity has a price of $500 and an annual interest payment of $25, the interest rate isA) 2.5 percent.B) 5 percent.C) 7.5 percent.D) 10 percent.Answer: BAACSB: Analytical Thinking52) The yield to maturity for a perpetuity is a useful approximation for the yield to maturity on long-term coupon bonds. It is called the ________ when approximating the yield for a coupon bond.A) current yieldB) discount yieldC) future yieldD) star yieldAnswer: AAACSB: Reflective Thinking53) The yield to maturity for a one-year discount bond equals the increase in price over the year, divided by theA) initial price.B) face value.C) interest rate.D) coupon rate.Answer: AAACSB: Analytical Thinking54) If a $10,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity isA) 5 percent.B) 10 percent.C) 50 percent.D) 100 percent.Answer: DAACSB: Analytical Thinking55) If a $5,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity isA) 0 percent.B) 5 percent.C) 10 percent.D) 20 percent.Answer: AAACSB: Analytical Thinking56) A discount bond selling for $15,000 with a face value of $20,000 in one year has a yield to maturity ofA) 3 percent.B) 20 percent.C) 25 percent.D) 33.3 percent.Answer: DAACSB: Analytical Thinking57) The yield to maturity for a discount bond is ________ related to the current bond price.A) negativelyB) positivelyC) notD) directlyAnswer: AAACSB: Reflective Thinking58) A discount bond is also called a ________ because the owner does not receive periodic payments.A) zero-coupon bondB) municipal bondC) corporate bondD) consolAnswer: AAACSB: Application of Knowledge59) Another name for a consol is a ________ because it is a bond with no maturity date. The owner receives fixed coupon payments forever.A) perpetuityB) discount bondC) municipalityD) high-yield bondAnswer: AAACSB: Application of Knowledge60) If the interest rate is 5%, what is the present value of a security that pays you $1, 050 next year and $1,102.50 two years from now? If this security sold for $2200, is the yield to maturity greater or less than 5%? Why?Answer: PV = $1,050/(1. +.05) + $1,102.50/(1 + 0.5)2PV = $2,000If this security sold for $2200, the yield to maturity is less than 5%. The lower the interest rate the higher the present value.AACSB: Analytical Thinking4.2 The Distinction Between Interest Rates and Returns1) The ________ is defined as the payments to the owner plus the change in a security's value expressed as a fraction of the security's purchase price.A) yield to maturityB) current yieldC) rate of returnD) yield rateAnswer: CAACSB: Application of Knowledge2) Which of the following are TRUE concerning the distinction between interest rates and returns?A) The rate of return on a bond will not necessarily equal the interest rate on that bond.B) The return can be expressed as the difference between the current yield and the rate of capital gains.C) The rate of return will be greater than the interest rate when the price of the bond falls during the holding period.D) The return can be expressed as the sum of the discount yield and the rate of capital gains. Answer: AAACSB: Reflective Thinking3) The sum of the current yield and the rate of capital gain is called theA) rate of return.B) discount yield.C) perpetuity yield.D) par value.Answer: AAACSB: Analytical Thinking4) What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $1,200 next year?A) 5 percentB) 10 percentC) -5 percentD) 25 percentAnswer: DAACSB: Analytical Thinking5) What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $900 next year?A) 5 percentB) 10 percentC) -5 percentD) -10 percentAnswer: CAACSB: Analytical Thinking6) The return on a 5 percent coupon bond that initially sells for $1,000 and sells for $950 next year isA) -10 percent.B) -5 percent.C) 0 percent.D) 5 percent.Answer: CAACSB: Analytical Thinking7) Suppose you are holding a 5 percent coupon bond maturing in one year with a yield to maturity of 15 percent. If the interest rate on one-year bonds rises from 15 percent to 20 percent over the course of the year, what is the yearly return on the bond you are holding?A) 5 percentB) 10 percentC) 15 percentD) 20 percentAnswer: CAACSB: Analytical Thinking8) I purchase a 10 percent coupon bond. Based on my purchase price, I calculate a yield to maturity of 8 percent. If I hold this bond to maturity, then my return on this asset isA) 10 percent.B) 8 percent.C) 12 percent.D) there is not enough information to determine the return.Answer: BAACSB: Analytical Thinking9) If the interest rates on all bonds rise from 5 to 6 percent over the course of the year, which bond would you prefer to have been holding?A) a bond with one year to maturityB) a bond with five years to maturityC) a bond with ten years to maturityD) a bond with twenty years to maturityAnswer: AAACSB: Analytical Thinking10) An equal decrease in all bond interest ratesA) increases the price of a five-year bond more than the price of a ten-year bond.B) increases the price of a ten-year bond more than the price of a five-year bond.C) decreases the price of a five-year bond more than the price of a ten-year bond.D) decreases the price of a ten-year bond more than the price of a five-year bond.Answer: BAACSB: Analytical Thinking11) An equal increase in all bond interest ratesA) increases the return to all bond maturities by an equal amount.B) decreases the return to all bond maturities by an equal amount.C) has no effect on the returns to bonds.D) decreases long-term bond returns more than short-term bond returns.Answer: DAACSB: Analytical Thinking12) Which of the following are generally TRUE of bonds?A) A bond's return equals the yield to maturity when the time to maturity is the same as the holding period.B) A rise in interest rates is associated with a fall in bond prices, resulting in capital gains on bonds whose terms to maturity are longer than the holding periods.C) The longer a bond's maturity, the smaller is the size of the price change associated with an interest rate change.D) Prices and returns for short-term bonds are more volatile than those for longer-term bonds. Answer: AAACSB: Reflective Thinking13) Which of the following are generally TRUE of all bonds?A) The longer a bond's maturity, the greater is the rate of return that occurs as a result of the increase in the interest rate.B) Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise.C) Prices and returns for short-term bonds are more volatile than those for longer term bonds.D) A fall in interest rates results in capital losses for bonds whose terms to maturity are longer than the holding period.Answer: BAACSB: Reflective Thinking14) The riskiness of an asset's returns due to changes in interest rates isA) exchange-rate risk.B) price risk.C) asset risk.D) interest-rate risk.Answer: DAACSB: Application of Knowledge15) Interest-rate risk is the riskiness of an asset's returns due toA) interest-rate changes.B) changes in the coupon rate.C) default of the borrower.D) changes in the asset's maturity.Answer: AAACSB: Application of Knowledge16) Prices and returns for ________ bonds are more volatile than those for ________ bonds, everything else held constant.A) long-term; long-termB) long-term; short-termC) short-term; long-termD) short-term; short-termAnswer: BAACSB: Reflective Thinking7) There is ________ for any bond whose time to maturity matches the holding period.A) no interest-rate riskB) a large interest-rate riskC) rate-of-return riskD) yield-to-maturity riskAnswer: AAACSB: Analytical Thinking18) All bonds that will not be held to maturity have interest rate risk which occurs because of the change in the price of the bond as a result ofA) interest-rate changes.B) changes in the coupon rate.C) default of the borrower.D) changes in the asset's maturity date.Answer: AAACSB: Application of Knowledge19) Your favorite uncle advises you to purchase long-term bonds because their interest rate is 10%. Should you follow his advice?Answer: It depends on where you think interest rates are headed in the future. If you think interest rates will be going up, you should not follow your uncle's advice because you would then have to discount your bond if you needed to sell it before the maturity date. Long-term bonds have a greater interest-rate risk.AACSB: Reflective Thinking4.3 The Distinction Between Real and Nominal Interest Rates1) The ________ interest rate is adjusted for expected changes in the price level.A) ex ante realB) ex post realC) ex post nominalD) ex ante nominalAnswer: AAACSB: Application of Knowledge2) The ________ interest rate more accurately reflects the true cost of borrowing.A) nominalB) realC) discountD) marketAnswer: BAACSB: Analytical Thinking3) The nominal interest rate minus the expected rate of inflationA) defines the real interest rate.B) is a less accurate measure of the incentives to borrow and lend than is the nominal interest rate.C) is a less accurate indicator of the tightness of credit market conditions than is the nominal interest rate.D) defines the discount rate.Answer: AAACSB: Analytical Thinking4) When the ________ interest rate is low, there are greater incentives to ________ and fewer incentives to ________.A) nominal; lend; borrowB) real; lend; borrowC) real; borrow; lendD) market; lend; borrowAnswer: CAACSB: Reflective Thinking5) The interest rate that describes how well a lender has done in real terms after the fact is called theA) ex post real interest rate.B) ex ante real interest rate.C) ex post nominal interest rate.D) ex ante nominal interest rate.Answer: AAACSB: Analytical Thinking6) The ________ states that the nominal interest rate equals the real interest rate plus the expected rate of inflation.A) Fisher equationB) Keynesian equationC) Monetarist equationD) Marshall equationAnswer: AAACSB: Application of Knowledge7) If the nominal rate of interest is 2 percent, and the expected inflation rate is -10 percent, the real rate of interest isA) 2 percent.B) 8 percent.C) 10 percent.D) 12 percent.Answer: DAACSB: Analytical Thinking8) In which of the following situations would you prefer to be the lender?A) The interest rate is 9 percent and the expected inflation rate is 7 percent.B) The interest rate is 4 percent and the expected inflation rate is 1 percent.C) The interest rate is 13 percent and the expected inflation rate is 15 percent.D) The interest rate is 25 percent and the expected inflation rate is 50 percent.Answer: BAACSB: Analytical Thinking9) In which of the following situations would you prefer to be the borrower?A) The interest rate is 9 percent and the expected inflation rate is 7 percent.B) The interest rate is 4 percent and the expected inflation rate is 1 percent.C) The interest rate is 13 percent and the expected inflation rate is 15 percent.D) The interest rate is 25 percent and the expected inflation rate is 50 percent.Answer: DAACSB: Analytical Thinking10) If you expect the inflation rate to be 15 percent next year and a one-year bond has a yield to maturity of 7 percent, then the real interest rate on this bond isA) 7 percent.B) 22 percent.C) -15 percent.D) -8 percent.Answer: DAACSB: Analytical Thinking11) If you expect the inflation rate to be 12 percent next year and a one-year bond has a yield to maturity of 7 percent, then the real interest rate on this bond isA) -5 percent.B) -2 percent.C) 2 percent.D) 12 percent.Answer: AAACSB: Analytical Thinking12) If you expect the inflation rate to be 4 percent next year and a one year bond has a yield to maturity of 7 percent, then the real interest rate on this bond isA) -3 percent.B) -2 percent.C) 3 percent.D) 7 percent.Answer: CAACSB: Analytical Thinking13) In the United States during the late 1970s, the nominal interest rates were quite high, but the real interest rates were negative. From the Fisher equation, we can conclude that expected inflation in the United States during this period wasA) irrelevant.B) low.C) negative.D) high.Answer: DAACSB: Reflective Thinking14) The interest rate on Treasury Inflation Indexed Securities can be roughly interpreted asA) the real interest rate.B) the nominal interest rate.C) the rate of inflation.D) the rate of deflation.Answer: AAACSB: Analytical Thinking15) Assuming the same coupon rate and maturity length, the difference between the yield on a Treasury Inflation Indexed Security and the yield on a nonindexed Treasury security provides insight intoA) the nominal interest rate.B) the real interest rate.C) the nominal exchange rate.D) the expected inflation rate.Answer: DAACSB: Analytical Thinking16) Assuming the same coupon rate and maturity length, when the interest rate on a Treasury Inflation Indexed Security is 3 percent, and the yield on a nonindexed Treasury bond is 8 percent, the expected rate of inflation isA) 3 percent.B) 5 percent.C) 8 percent.D) 11 percent.Answer: BAACSB: Analytical Thinking17) Would it make sense to buy a house when mortgage rates are 14% and expected inflation is 15%? Explain your answer.Answer: Even though the nominal rate for the mortgage appears high, the real cost of borrowing the funds is -1%. Yes, under this circumstance it would be reasonable to make this purchase. AACSB: Reflective Thinking4.4 Web Appendix: Measuring Interest-Rate Risk: Duration1) Duration isA) an asset's term to maturity.B) the time until the next interest payment for a coupon bond.C) the average lifetime of a debt security's stream of payments.D) the time between interest payments for a coupon bond.Answer: CAACSB: Application of Knowledge2) Comparing a discount bond and a coupon bond with the same maturityA) the coupon bond has the greater effective maturity.B) the discount bond has the greater effective maturity.C) the effective maturity cannot be calculated for a coupon bond.D) the effective maturity cannot be calculated for a discount bond.Answer: BAACSB: Reflective Thinking3) The duration of a coupon bond increasesA) the longer is the bond's term to maturity.B) when interest rates increase.C) the higher the coupon rate on the bond.D) the higher the bond price.Answer: AAACSB: Reflective Thinking4) All else equal, when interest rates ________, the duration of a coupon bond ________.A) rise; fallsB) rise; increasesC) falls; fallsD) falls; does not changeAnswer: AAACSB: Reflective Thinking5) All else equal, the ________ the coupon rate on a bond, the ________ the bond's duration.A) higher; longerB) higher; shorterC) lower; shorterD) greater; longerAnswer: BAACSB: Reflective Thinking。
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Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin) Chapter 4 The Meaning of Interest RatesMeasuring Interest Rates1) The concept of ______ is based on the common-sense notion that a dollar paidto you in the future is less valuable to you than a dollar today.A) present valueB) future valueC) interestD) deflationAnswer: AAACSB: Application of Knowledge2) The present value of an expected future payment _______ as the interest rate increases.A) fallsB) risesC) is constantD) is unaffectedAnswer: AAACSB: Reflective Thinking3) An increase in the time to the promised future payment ___________ the present value of the payment.A) decreasesB) increasesC) has no effect onD) is irrelevant to Answer: AAACSB: Reflective Thinking4) With an interest rate of 6 percent, the present value of $100 next year is approximatelyA) $106.B) $100.C) $94.D) $92.Answer: CAACSB: Analytical Thinking5) What is the present value of $ to be paid in two years if the interest rate is5 percent?A) $B) $C) $D) $Answer: AAACSB: Analytical Thinking6) If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate isA) 5 percent.B) 10 percent.C) percent.D) 15 percent. Answer: B AACSB: Analytical Thinking7) To claim that a lottery winner who is to receive $1 million per year for twenty years has won $20 million ignores the process ofA) face value.B) par value.C) deflation.D) discounting the future.Answer: DAACSB: Analytical Thinking8) A credit market instrument that provides the borrower with an amount of funds that must be repaid at the maturity date along with an interest payment is known as aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond. Answer: AAACSB: Application of Knowledge9) A credit market instrument that requires the borrower to make the same payment every period until the maturity date is known as aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond.Answer: BAACSB: Application of Knowledge10) Which of the following are TRUE of fixed payment loans?A) The borrower repays both the principal and interest at the maturity date.B) Installment loans and mortgages are frequently of the fixed payment type.C) The borrower pays interest periodically and the principal at the maturitydate.D) Commercial loans to businesses are often of this type.Answer: BAACSB: Reflective Thinking11) A fully amortized loan is another name forA) a simple loan.B) a fixed-payment loan.C) a commercial loan.D) an unsecured loan.Answer: BAACSB: Application of Knowledge12) A credit market instrument that pays the owner a fixed coupon payment every year until the maturity date and then repays the face value is called aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond. Answer: CAACSB: Application of Knowledge13) A _______ pays the owner a fixed coupon payment every year until the maturitydate, when the _______ value is repaid.A) coupon bond; discountB) discount bond; discountC) coupon bond; faceD) discount bond; faceAnswer: CAACSB: Analytical Thinking14) The ______ is the final amount that will be paid to the holder of a couponbond.A) discount valueB) coupon valueC) face valueD) present value Answer: C AACSB: Application of Knowledge15) Whentalking about a coupon bond, face value and ___________ meanthe same thing.A) par valueB) coupon valueC) amortized valueD) discount value Answer: A AACSB: Application of Knowledge16) The dollar amount of the yearly coupon payment expressed as a percentage of the face value of the bond is called the bond'sA) coupon rate.B) maturity rate.C) face value rate.D) payment rate. Answer: AAACSB: Application of Knowledge17) The ______ is calculated by multiplying the coupon rate times the par valueof the bond.A) present valueB) face valueC) coupon paymentD) maturity payment Answer: CAACSB: Analytical Thinking18) If a $1000 face value coupon bond has a coupon rate of percent, then the coupon payment every year isA) $.B) $.C) $.D) $ Answer: AAACSB: Analytical Thinking19) If a $5,000 coupon bond has a coupon rate of 13 percent, then the coupon payment every year isA) $650.B) $1,300.C) $130.D) $13. Answer: AAACSB: Analytical Thinking20) An $8,000 coupon bond with a $400 coupon payment every year has a coupon rate ofA) 5 percent.B) 8 percent.C) 10 percent.D) 40 percent. Answer: AAACSB: Analytical Thinking21) A $1000 face value coupon bond with a $60 coupon payment every year has a coupon rate ofA) .6 percent.B) 5 percent.C) 6 percent.D) 10 percent.Answer: C AACSB: Analytical Thinking22) All of the following are examples of coupon bonds EXCEPTA) corporate bonds.B) . Treasury bills.C) . Treasury notes.D) . Treasury bonds. Answer: B AACSB: Analytical Thinking23) A bond that is bought at a price below its face value and the face value is repaid at a maturity date is called aA) simple loan.B) fixed-payment loan.C) coupon bond.D) discount bond. Answer: D AACSB: Application of Knowledge24) A ______ is bought at a price below its face value, and the _______ valueis repaid at the maturity date.A) coupon bond; discountB) discount bond; discountC) coupon bond; faceD) discount bond; face Answer: D AACSB: Analytical Thinking25) A discount bondA) pays the bondholder a fixed amount every period and the face value at maturity.B) pays the bondholder the face value at maturity.C) pays all interest and the face value at maturity.D) pays the face value at maturity plus any capital gain. Answer: BAACSB: Reflective Thinking26) Examples of discount bonds includeA) . Treasury bills.B) corporate bonds.C) . Treasury notes.D) municipal bonds. Answer: AAACSB: Analytical Thinking27) Which of the following are TRUE for discount bonds?A) A discount bond is bought at par.B) The purchaser receives the face value of the bond at the maturity date.C) . Treasury bonds and notes are examples of discount bonds.D) The purchaser receives the par value at maturity plus any capital gains. Answer: B AACSB: Reflective Thinking28) The interest rate that equates the present value of payments received from a debt instrument with its value today is theA) simple interest rate.B) current yield.C) yield to maturity.D) real interest rate. Answer: CAACSB: Application of Knowledge29) Economists consider the _______ to be the most accurate measure of interestrates.A) simple interest rate.B) current yield.C) yield to maturity.D) real interest rate. Answer: CAACSB: Reflective Thinking30) For simple loans, the simple interest rate is ______________ the yield to maturity.A) greater thanB) less thanC) equal toD) not comparable to Answer: CAACSB: Application of Knowledge31) If the amount payable in two years is $2420 for a simple loan at 10 percent interest, the loan amount isA) $1000.B) $1210.C) $2000.D) $2200. Answer: CAACSB: Analytical Thinking32) For a 3-year simple loan of $10,000 at 10 percent, the amount to be repaid isA) $10,030.B) $10,300.C) $13,000.D) $13,310. Answer: D AACSB: Analytical Thinking33) If $22,050 is the amount payable in two years for a $20,000 simple loan made today, the interest rate isA) 5 percent.B) 10 percent.C) 22 percent.D) 25 percent. Answer: A AACSB: Analytical Thinking34) If a security pays $110 next year and $121 the year after that, what is its yield to maturity if it sells for $200?A) 9 percentB) 10 percentC) 11 percentD) 12 percent Answer: BAACSB: Analytical Thinking35) The present value of a fixed-payment loan is calculated as the _______________ of the present value of all cash flow payments.A) sumB) differenceC) multipleD) log Answer: AAACSB: Analytical Thinking36) Which of the following are TRUE for a coupon bond?A) When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate.B) The price of a coupon bond and the yield to maturity are positively related.C) The yield to maturity is greater than the coupon rate when the bond price is above the par value.D) The yield is less than the coupon rate whenthe bond price is below the par value. Answer: AAACSB: Reflective Thinking37) The _______ of a coupon bond and the yield to maturity are inversely related.A) priceB) par valueC) maturity dateD) termAnswer: AAACSB: Reflective Thinking38) The price of a coupon bond and the yield to maturity are _____________ related; that is, as the yield to maturity _______ , the price of the bond _______ .A) positively; rises; risesB) negatively; falls; fallsC) positively; rises; fallsD) negatively; rises; fallsAnswer: DAACSB: Reflective Thinking39) The yield to maturity is ______ than the _______ rate when the bond price is _______ its face value.A) greater; coupon; aboveB) greater; coupon; belowC) greater; perpetuity; aboveD) less; perpetuity; belowAnswer: BAACSB: Reflective Thinking40) The _______ is below the coupon rate when the bond price is ______ its par value.A) yield to maturity; aboveB) yield to maturity; belowC) discount rate; aboveD) discount rate; below Answer: AAACSB: Reflective Thinking41) A $10,000 8 percent coupon bond that sells for $10,000 has a yield to maturity ofA) 8 percent.B) 10 percent.C) 12 percent.D) 14 percent.Answer: AAACSB: Analytical Thinking42) Which of the following $1,000 face-value securities has the highest yield to maturity?A) a 5 percent coupon bond selling for $1,000B) a 10 percent coupon bond selling for $1,000C) a 12 percent coupon bond selling for $1,000D) a 12 percent coupon bond selling for $1,100Answer: CAACSB: Analytical Thinking43) Which of the following $5,000 face-value securities has the highest yield to maturity?A) a 6 percent coupon bond selling for $5,000B) a 6 percent coupon bond selling for $5,500C) a 10 percent coupon bond selling for $5,000D) a 12 percent coupon bond selling for $4,500Answer: DAACSB: Analytical Thinking44) Which of the following $1,000 face-value securities has the highest yield to maturity?A) a 5 percent coupon bond with a price of $600B) a 5 percent coupon bond with a price of $800C) a 5 percent coupon bond with a price of $1,000D) a 5 percent coupon bond with a price of $1,200Answer: AAACSB: Analytical Thinking45) Which of the following $1,000 face-value securities has the lowest yield to maturity?A) a 5 percent coupon bond selling for $1,000B) a 10 percent coupon bond selling for $1,000C) a 15 percent coupon bond selling for $1,000D) a 15 percent coupon bond selling for $900 Answer: AAACSB: Analytical Thinking46) Which of the following bonds would you prefer to be buying?A) a $10,000 face-value security with a 10 percent coupon selling for $9,000B) a $10,000 face-value security with a 7 percent coupon selling for $10,000C) a $10,000 face-value security with a 9 percent coupon selling for $10,000D) a $10,000 face-value security with a 10 percent coupon selling for $10,000 Answer: A AACSB: Analytical Thinking47) A coupon bond that has no maturity date and no repayment of principal ais calledA) consol.B) cabinet.C) Treasury bill.D) Treasury note.Answer: AAACSB: Application of Knowledge48) The price of a consol equals the coupon paymentA) times the interest rate.B) plus the interest rate.C) minus the interest rate.D) divided by the interest rate.Answer: DAACSB: Analytical Thinking49) The interest rate on a consol equals theA) price times the coupon payment.B) price divided by the coupon payment.C) coupon payment plus the price.D) coupon payment divided by the price.Answer: DAACSB: Analytical Thinking50) A consol paying $20 annually when the interest rate is 5 percent has a price ofA) $100.B) $200.C) $400.D) $800.Answer: CAACSB: Analytical Thinking51) If a perpetuity has a price of $500 and an annual interest payment of $25, the interest rate isA) percent.B) 5 percent.C) percent.D) 10 percent. Answer: BAACSB: Analytical Thinking52) The yield to maturity for a perpetuity is a useful approximation for the yield to maturity on long-term coupon bonds. It is called the ________________________ when approximating the yield for a coupon bond.A) current yieldB) discount yieldC) future yieldD) star yieldAnswer: AAACSB: Reflective Thinking53) The yield to maturity for a one-year discount bond equals the increase in price over the year, divided by theA) initial price.B) face value.C) interest rate.D) coupon rate.Answer: AAACSB: Analytical Thinking54) If a $10,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity isA) 5 percent.B) 10 percent.C) 50 percent.D) 100 percent.Answer: DAACSB: Analytical Thinking55) If a $5,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity isA) 0 percent.B) 5 percent.C) 10 percent.D) 20 percent.Answer: AAACSB: Analytical Thinking56) A discount bond selling for $15,000 with a face value of $20,000 in one year has a yield to maturity ofA) 3 percent.B) 20 percent.C) 25 percent.D) percent.Answer: DAACSB: Analytical Thinking57) The yield to maturity for a discount bond is ______ related to the currentbond price.A) negativelyB) positivelyC) notD) directlyAnswer: AAACSB: Reflective Thinking58) A discount bond is also called a _______ because the owner does not receive periodic payments.A) zero-coupon bondB) municipal bondC) corporate bondD) consolAnswer: AAACSB: Application of Knowledge59) Another name for a consol is a _______ because it is a bond with no maturitydate. The owner receives fixed coupon payments forever.A) perpetuityB) discount bondC) municipalityD) high-yield bondAnswer: AAACSB: Application of Knowledge60) If the interest rate is 5%, what is the present value of a security that paysyou $1, 050 next year and $1, two years from now? If this security sold for $2200, is the yield to maturity greater or less than 5%? Why?Answer: PV = $1,050/(1. +.05) + $1,(1 + 2PV = $2,000If this security sold for $2200, the yield to maturity is less than 5%. The lowerthe interest rate the higher the present value.AACSB: Analytical ThinkingThe Distinction Between Interest Rates and Returns1) The ______ is defined as the payments to the owner plus the change in asecurity's value expressed as a fraction of the security's purchase price.A) yield to maturityB) current yieldC) rate of returnD) yield rateAnswer: CAACSB: Application of Knowledge2) Which of the following are TRUEconcerning the distinction between interest rates and returns?A) The rate of return on a bond will not necessarily equal the interest rate on that bond.B) The return can be expressed as the difference between the current yield and the rate of capital gains.C) The rate of return will be greater than the interest rate when the price of the bond falls during the holding period.D) The return can be expressed as the sum of the discount yield and the rate of capital gains. Answer: AAACSB: Reflective Thinking3) The sum of the current yield and the rate of capital gain is called theA) rate of return.B) discount yield.C) perpetuity yield.D) par value.Answer: AAACSB: Analytical Thinking4) What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $1,200 next year?A) 5 percentB) 10 percentC) -5 percentD) 25 percentAnswer: DAACSB: Analytical Thinking5) What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $900 next year?A) 5 percentB) 10 percentC) -5 percentD) -10 percentAnswer: CAACSB: Analytical Thinking6) The return on a 5 percent coupon bond that initially sells for $1,000 and sells for $950 next year isA) -10 percent.B) -5 percent.C) 0 percent.D) 5 percent.Answer: CAACSB: Analytical Thinking7) Suppose you are holding a 5 percent coupon bond maturing in one year with a yield tomaturity of 15 percent. If the interest rate on one-year bonds rises from 15 percent to 20percent over the course of the year, what is the yearly return on the bond you are holding?A) 5 percentB) 10 percentC) 15 percentD) 20 percent Answer: C AACSB: Analytical Thinking8) I purchase a 10 percent coupon bond. Based on my purchase price, I calculate a yield to maturity of 8 percent. If I hold this bond to maturity, then my return on this asset isA) 10 percent.B) 8 percent.C) 12 percent.D) there is not enough information to determine the return. Answer: BAACSB: Analytical Thinking9) If the interest rates on all bonds rise from 5 to 6 percent over the course of the year, which bond would you prefer to have been holding?A) a bond with one year to maturityB) a bond with five years to maturityC) a bond with ten years to maturityD) a bond with twenty years to maturity Answer: AAACSB: Analytical Thinking10) An equal decrease in all bond interest ratesbond more than the price of a ten-year bond. bond more than the price of a five-year bond. bond more than the price of a ten-year bond. bond more than the price of a five-year bond. AACSB: Analytical Thinking11) An equal increase in all bond interest ratesA) increases the return to all bond maturities by an equal amount.B) decreases the return to all bond maturities by an equal amount.C) has no effect on the returns to bonds.D) decreases long-term bond returns more than short-term bond returns.Answer: DAACSB: Analytical ThinkingA) increases the price B) increases the price C)decreases the price D) decreases the priceAnswer: Bof a five-yearof a ten-year of a five-yearof a ten-year12) Which of the following are generally TRUE of bonds?A) A bond's return equals the yield to maturity when the time to maturity is the same as the holding period.B) A rise in interest rates is associated with a fall in bond prices, resulting in capital gains on bonds whose terms to maturity are longer than the holding periods.C) The longer a bond's maturity, the smaller is the size of the price change associated with an interest rate change.D) Prices and returns for short-term bonds are more volatile than those for longer-term bonds. Answer: AAACSB: Reflective Thinking13) Which of the following are generally TRUE of all bonds?A) The longer a bond's maturity, the greater is the rate of return that occurs as a result of the increase in the interest rate.B) Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise.C) Prices and returns for short-term bonds are more volatile than those for longer term bonds.D) A fall in interest rates results in capital losses for bonds whose terms to maturity are longer than the holding period.Answer: BAACSB: Reflective Thinking14) The riskiness of an asset's returns due to changes in interest rates isA) exchange-rate risk.B) price risk.C) asset risk.D) interest-rate risk.Answer: DAACSB: Application of Knowledge15) Interest-rate risk is the riskiness of an asset's returns due toA) interest-rate changes.B) changes in the coupon rate.C) default of the borrower.D) changes in the asset's maturity.Answer: AAACSB: Application of Knowledge16) Prices and returns for __________ bonds are more volatile than those for ___________ bonds, everything else held constant.A) long-term; long-termB) long-term; short-termC) short-term; long-termD) short-term; short-term Answer: B AACSB: Reflective Thinking7) There is ________ for any bond whosetime to maturity matches the holding period.A) no interest-rate riskB) a large interest-rate riskC) rate-of-return riskD) yield-to-maturity riskAnswer: AAACSB: Analytical Thinking18) All bonds that will not be held to maturity have interest rate risk which occurs because of the change in the price of the bond as a result ofA) interest-rate changes.B) changes in the coupon rate.C) default of the borrower.D) changes in the asset's maturity date.Answer: AAACSB: Application of Knowledge19) Your favorite uncle advises you to purchase long-term bonds because their interest rate is 10%. Should you follow his advice?Answer: It depends on where you think interest rates are headed in the future. If you think interest rates will be going up, you should not follow your uncle's advice because you would then have to discount your bond if you needed to sell it before the maturity date. Long-term bonds have a greater interest-rate risk. AACSB: Reflective ThinkingThe Distinction Between Real and Nominal Interest Rates1) The _______ interest rate is adjusted for expected changes in the price level.A) ex ante realB) ex post realC) ex post nominalD) ex ante nominal Answer: A AACSB: Application of Knowledge2) The _______ interest rate more accurately reflects the true cost of borrowing.A) nominalB) realC) discountD) marketAnswer: BAACSB: Analytical Thinking3) The nominal interest rate minus the expected rate of inflationA) defines the real interest rate.B) is a less accurate measure of the incentives to borrow and lend than is the nominal interest rate.C) is a less accurate indicator of the tightness of credit market conditions thanis the nominal interest rate.D) defines the discount rate.Answer: AAACSB: Analytical Thinking4) Whenthe _______ interest rate is low, there are greater incentives to ________________ and fewer incentives to ______ .A) nominal; lend; borrowB) real; lend; borrowC) real; borrow; lendD) market; lend; borrowAnswer: CAACSB: Reflective Thinking5) The interest rate that describes how well a lender has done in real terms after the fact is called theA) ex post real interest rate.B) ex ante real interest rate.C) ex post nominal interest rate.D) ex ante nominal interest rate.Answer: AAACSB: Analytical Thinking6) The _______ states that the nominal interest rate equals the real interest rateplus the expected rate of inflation.A) Fisher equationB) Keynesian equationC) Monetarist equationD) Marshall equationAnswer: AAACSB: Application of Knowledge7) If the nominal rate of interest is 2 percent, and the expected inflation rateis -10 percent, the real rate of interest isA) 2 percent.B) 8 percent.C) 10 percent.D) 12 percent.Answer: DAACSB: Analytical Thinking8) In which of the following situations would you prefer to be the lender?A) The interest rate is 9 percent and the expected inflation rate is 7 percent.B) The interest rate is 4 percent and the expected inflation rate is 1 percent.C) The interest rate is 13 percent and the expected inflation rate is 15 percent.D) The interest rate is 25 percent and the expected inflation rate is 50 percent. Answer: B AACSB: Analytical Thinking9) In which of the following situations would you prefer to be the borrower?A) The interest rate is 9 percent and the expected inflation rate is 7 percent.B) The interest rate is 4 percent and the expected inflation rate is 1 percent.C) The interest rate is 13 percent and the expected inflation rate is 15 percent.D) The interest rate is 25 percent and the expected inflation rate is 50 percent. Answer: D AACSB: Analytical Thinking10) If you expect the inflation rate to be 15 percent next year and a one-year bond has a yield to maturity of 7 percent, then the real interest rate on this bond isA) 7 percent.B) 22 percent.C) -15 percent.D) -8 percent. Answer: D AACSB: Analytical Thinking11) If you expect the inflation rate to be 12 percent next year and a one-year bond has a yield to maturity of 7 percent, then the real interest rate on this bond isA) -5 percent.B) -2 percent.C) 2 percent.D) 12 percent.Answer: AAACSB: Analytical Thinking12) If you expect the inflation rate to be 4 percent next year and a one year bondhas a yield to maturity of 7 percent, then the real interest rate on this bond isA) -3 percent.B) -2 percent.C) 3 percent.D) 7 percent.Answer: C AACSB: Analytical Thinking13) In the United States during the late 1970s, the nominal interest rates were quite high, but the real interest rates were negative. From the Fisher equation, we can conclude that expected inflation in the United States during this period wasA) irrelevant.B) low.C) negative.D) high. Answer: D AACSB: Reflective Thinking14) The interest rate on Treasury Inflation Indexed Securities can be roughly interpreted asA) the real interest rate.B) the nominal interest rate.C) the rate of inflation.D) the rate of deflation. Answer: A AACSB: Analytical Thinking15) Assuming the same coupon rate and maturity length, the difference between the yield on a Treasury Inflation Indexed Security and the yield on a nonindexed Treasury security provides insight intoA) the nominal interest rate.B) the real interest rate.C) the nominal exchange rate.D) the expected inflation rate. Answer: D AACSB: Analytical Thinking16) Assuming the same coupon rate and maturity length, when the interest rate on a Treasury Inflation Indexed Security is 3 percent, and the yield on a nonindexed Treasury bond is 8 percent, the expected rate of inflation isA) 3 percent.B) 5 percent.C) 8 percent.D) 11 percent. Answer: B AACSB: Analytical Thinking17) Would it make sense to buy a house when mortgage rates are 14% and expected inflation is 15%? Explain your answer.Answer: Even though the nominal rate for the mortgage appears high, the real cost of borrowing the funds is -1%. Yes, under this circumstance it would be reasonable to make this purchase.AACSB: Reflective ThinkingWeb Appendix: Measuring Interest-Rate Risk: Duration1) Duration isA) an asset's term to maturity.B) the time until the next interest payment for a coupon bond.C) the average lifetime of a debt security's stream of payments.D) the time between interest payments for a coupon bond.Answer: CAACSB: Application of Knowledge2) Comparing a discount bond and a coupon bond with the same maturityA) the coupon bond has the greater effective maturity.B) the discount bond has the greater effective maturity.C) the effective maturity cannot be calculated for a coupon bond.D) the effective maturity cannot be calculated for a discount bond.Answer: BAACSB: Reflective Thinking3) The duration of a coupon bond increasesA) the longer is the bond's term to maturity.B) when interest rates increase.C) the higher the coupon rate on the bond.D) the higher the bond price.Answer: AAACSB: Reflective Thinking4) All else equal, when interest rates ______ , the duration of a coupon bondA) rise; fallsB) rise; increasesC) falls; fallsD) falls; does not changeAnswer: AAACSB: Reflective Thinking5) All else equal, the ___________ the coupon rate on a bond, the __________ the bond's duration.A) higher; longerB) higher; shorterC) lower; shorterD) greater; longerAnswer: BAACSB: Reflective Thinking6) If a financial institution has 50% of its portfolio in a bond with a five-year duration and 50% of its portfolio in a bond with a seven-year duration, what is the duration of the portfolio?A) 12 yearsB) 7 yearsC) 6 yearsD) 5 years。