Money Banking and the Financial System 3E - Hubbard - TB chapter 3

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1、Money,Banking,andtheFinancialSystem,3e(Hubbard/O'Brien)Chapter3InterestRatesandRatesofReturn3.1TheInterestRate,PresentValue,andFutureValue1)SupposeMatt'sNewCarsissuesabondinwhichthey'llneedtopay$10,000inoneyear,whichincludes4%interest.Howmuchwilltheyreceiveforthebond?A)$9,600B)$9,615C)$10,000D

2、)$10,400Answer:BDiff:2PageRef:59Topic:presentvalueandfuturevalueObjective:Explainhowtousetheinterestrateincalculatingpresentvaluesandfuturevalues*:RecurringAACSB:AnalyticalThinking2)ThoughTreasurybondsmayhavelittledefaultrisk,whattypeofriskexistswhencurrentinterestratesarelow?A)priceriskB)refi

3、nancingriskC)interest-rateriskD)presentvalueriskAnswer:CDiff:1PageRef:53-54Topic:presentvalueandfuturevalueSpecialFeature:ChapterOpener:AreTreasuryBondsaRiskyInvestment?Objective:ExplainhowtousetheinterestrateincalculatingpresentvaluesandfuturevaluesAACSB:ReflectiveThinking3)Whichofthefollowin

4、gwillleadtoahigherinterestrateonaloan?A)lowerinflationB)loweropportunitycostC)increasedperceivedriskofdefaultD)reducedlikelihoodofborrowernotpayingtheloanAnswer:CDiff:2PageRef:55Topic:presentvalueandfuturevalueObjective:Explainhowtousetheinterestrateincalculatingpresentvaluesandfuturevalues*:R

5、ecurringAACSB:ReflectiveThinking35Copyright©2018PearsonEducation,Inc.4)ThekeytopresentvaluecalculationsisthattheyA)areappropriateonlyforfundsinthesametimeperiod.B)provideacommonunitformeasuringfundsatdifferenttimes.C)provideaccurateanswersonlyinalow-inflationenvironment.D)provideaccurateanswer

6、sonlyinahigh-inflationenvironment.Answer:BDiff:2PageRef:60Topic:presentvalueandfuturevalueObjective:Explainhowtousetheinterestrateincalculatingpresentvaluesandfuturevalues*:RecurringAACSB:ReflectiveThinking5)CompoundingreferstoA)thecalculationofinterestratesafterthecompoundingeffectoftaxeshasb

7、eenallowedfor.B)thepayingbackofbothinterestandprincipalduringthelifeofafixed-paymentloan.C)theprocessofearninginterestonboththeinterestandtheprincipalofaninvestment.D)theincreasedvalueofaninvestmentthatarisesfromthepaymentofperiodicinte