ECON3303

MoneyandBanking

Exam1

Prof.Crowder

Name__________________________________________________________

MULTIPLECHOICE.Choosetheonealternativethatbestcompletesthestatementoranswersthequestion. 1) Theprimarypurposeofdepositinsuranceisto A) protectbankshareholdersagainstlosses. B) protectbankemployeesfromunemployment. C) preventbankingpanics. D) improvetheflowofinformationtoinvestors. 2) Inwhichofthefollowingsituationswouldyouprefertobeborrowing? A) Theinterestrateis13percentandtheexpectedinflationrateis15percent. B) Theinterestrateis25percentandtheexpectedinflationrateis50percent. C) Theinterestrateis9percentandtheexpectedinflationrateis7percent. D) Theinterestrateis4percentandtheexpectedinflationrateis1percent. 3) Anexaminationofrevisedmoneysupplystatistics,whencomparedtotheinitialstatistics, suggeststhattheinitialstatistics A) provideapoorguideofmonetarypolicybecausetheyareusuallyunderestimatesofthe revisedstatistics. B) provideagoodguideofmonetarypolicy,thoughtheyareusuallyunderestimatesofthe revisedstatistics. C) areprettygood. D) donotprovideagoodguidetoshort-runmovementsinthemoneysupply. 4) Aprofessionalbaseballplayermaybecontractuallyrestrictedfromskiing.Theteamowner includesthisclauseintheplayerscontracttoprotectagainst A) regulatorycircumvention. B) adverseselection. C) risksharing. D) moralhazard. 5) Toaneconomist,________isanythingthatisgenerallyacceptedinpaymentforgoodsand servicesorintherepaymentofdebt. A) income B) wealth C) money D) credit 6) Pricesandreturnsfor________bondsaremorevolatilethanthosefor________bonds,everything elseheldconstant. A) short-term;short-term B) short-term;long-term C) long-term;short-term D) long-term;long-term 7) The________isthefinalamountthatwillbepaidtotheholderofacouponbond. A) discountvalue B) presentvalue C) couponvalue D) facevalue 8) Bondsthataresoldinaforeigncountryandaredenominatedinacurrencyotherthanthatofthe countryinwhichitissoldareknownas A) Eurobonds. B) equitybonds. C) countrybonds. D) foreignbonds. 1)

2)

3)

4)

5)

6)

7)

8)

9) Whichofthefollowingcanbedescribedasinvolvingindirectfinance? A) Youbuysharesinamutualfund. B) Acorporationbuysashort-termsecurityissuedbyanothercorporationintheprimary market. C) YoubuyaU.S.TreasurybillfromtheU.S.Treasury. D) Youmakealoantoyourneighbor. 10) Theprocesswherefinancialintermediariescreateandselllow-riskassetsandusetheproceedsto purchaseriskierassetsisknownas A) riskselling. B) risksharing. C) riskaversion. D) riskneutrality. 11) Theprimaryliabilitiesofacreditunionare A) commercialloans. C) mortgages.

9)

10)

11) B) bonds. D) deposits. 12) D) $13,310. 13)

12) Fora3-yearsimpleloanof$10,000at10percent,theamounttoberepaidis A) $10,030. B) $10,300. C) $13,000.

13) Budgetsdeficitscanbeaconcernbecausetheymight A) leadtohigherbondprices. B) ultimatelyleadtohigherinflation. C) leadtolowerinterestrates. D) leadtoaslowerrateofmoneygrowth. 14) An$8,000couponbondwitha$400couponpaymenteveryyearhasacouponrateof A) 5percent. B) 8percent. C) 10percent. D) 40percent. 15) Financialmarketspromoteeconomicefficiencyby A) creatinginflation. B) reducinginvestment. C) channelingfundsfromsaverstoinvestors. D) channelingfundsfrominvestorstosavers. 16) Moneymarketmutualfundsharesfunctionlike A) currency. C) bonds.

14)

15)

16) B) checkingaccountsthatpayinterest. D) stocks. 17)

17) Anequalincreaseinallbondinterestrates A) decreasesthereturntoallbondmaturitiesbyanequalamount. B) decreaseslong-termbondreturnsmorethanshort-termbondreturns. C) hasnoeffectonthereturnstobonds. D) increasesthereturntoallbondmaturitiesbyanequalamount. 18) Theyieldtomaturityis________thanthe________ratewhenthebondpriceis________itsface value. A) greater;coupon;above B) less;perpetuity;below C) greater;perpetuity;above D) greater;coupon;below

18)

19) Animportantfunctionofsecondarymarketsisto A) makeiteasiertosellfinancialinstrumentstoraisefunds. B) makeiteasierforgovernmentstoraisetaxes. C) createamarketfornewlyconstructedhouses. D) raisefundsforcorporationsthroughthesaleofsecurities. 20) IntheUnitedStates,loansfrom________arefar________importantforcorporatefinancethan aresecuritiesmarkets. A) financialintermediaries;less B) governmentagencies;more C) financialintermediaries;more D) governmentagencies;less 21) Long-termdebthasamaturitythatis__________. A) lessthanayear. C) tenyearsorlonger.

19)

20)

21) B) betweenfiveandtenyears. D) betweenoneandtenyears. 22)

22) Thepricepaidfortherentalofborrowedfunds(usuallyexpressedasapercentageoftherentalof $100peryear)iscommonlyreferredtoasthe A) interestrate. B) aggregatepricelevel. C) exchangerate. D) inflationrate. 23) Financialinstitutionsthatacceptdepositsandmakeloansarecalled________institutions. A) contractualsavings B) depository C) investment D) underwriting 24) Abondthatisboughtatapricebelowitsfacevalueandthefacevalueisrepaidatamaturitydate iscalleda A) couponbond. B) discountbond. C) fixed-paymentloan. D) simpleloan. 25) Whichofthefollowingbondswouldyouprefertobebuying? A) A$10,000face-valuesecuritywitha10percentcouponsellingfor$9,000 B) A$10,000face-valuesecuritywitha7percentcouponsellingfor$10,000 C) A$10,000face-valuesecuritywitha9percentcouponsellingfor$10,000 D) A$10,000face-valuesecuritywitha10percentcouponsellingfor$10,000 26) Federalfundsare A) loansmadebytheFederalReserveSystemtobanks. B) loansmadebybankstoeachother. C) loansmadebybankstotheFederalReserveSystem. D) fundsraisedbythefederalgovernmentinthebondmarket. 27) Theconversionofabartereconomytoonethatusesmoney A) increasesefficiencybyreducingtheneedtospecialize. B) increasesefficiencybyreducingtransactionscosts. C) increasesefficiencybyreducingtheneedtoexchangegoodsandservices. D) doesnotincreaseeconomicefficiency. 28) Adiscountbondsellingfor$15,000withafacevalueof$20,000inoneyearhasayieldtomaturity of A) 3percent. B) 20percent. C) 25percent. D) 33.3percent.

23)

24)

25)

26)

27)

28)

29) Thehigherasecurityspriceinthesecondarymarketthe_________fundsafirmcanraiseby sellingsecuritiesinthe_________market. A) more;primary B) less;primary C) more;secondary D) less;secondary 30) Ifbadcreditrisksaretheoneswhomostactivelyseekloansand,therefore,receivethemfrom financialintermediaries,thenfinancialintermediariesfacetheproblemof A) adverseselection. B) costlystateverification. C) free-riding. D) moralhazard. 31) Ifasecuritypays$110nextyearand$121theyearafterthat,whatisitsyieldtomaturityifitsells for$200? A) 9percent B) 10percent C) 11percent D) 12percent 32) Whenstockpricesfall A) anindividualswealthmaydecreaseandtheirwillingnesstospendmaydecrease. B) abusinessfirmwillbemorelikelytosellstocktofinanceinvestmentspending. C) anindividualswealthmaydecreasebuttheirwillingnesstospendisnotaffected. D) anindividualswealthisnotaffectednoristheirwillingnesstospend. 33) Adisadvantageof________isthatitisveryheavyandhardtotransportfromoneplaceto another. A) papermoney B) electronicmoney C) fiatmoney D) commoditymoney 34) Well-functioningfinancialmarkets A) causeinflation. C) eliminatetheneedforindirectfinance.

29)

30)

31)

32)

33)

34) B) produceanefficientallocationofcapital. D) causefinancialcrises. 35)

35) Ofmoneysthreefunctions,theonethatdistinguishesmoneyfromotherassetsisitsfunctionasa A) standardofdeferredpayment. B) unitofaccount. C) mediumofexchange. D) storeofvalue. 36) Ifanindividualmovesmoneyfromasmall -denominationtimedeposittoademanddeposit account, A) M1staysthesameandM2increases. B) M1increasesandM2staysthesame. C) M1increasesandM2decreases. D) M1staysthesameandM2staysthesame. 37) Whenaninvestmentbank________securities,itguaranteesapriceforacorporationssecurities andthensellsthemtothepublic. A) underwrites B) overwrites C) overtakes D) undertakes 38) Banksareimportanttothestudyofmoneyandtheeconomybecausethey A) aretheonlyimportantfinancialinstitutionintheU.S.economy. B) channelfundsfrominvestorstosavers. C) havebeenasourceofrapidfinancialinnovation. D) createinflation.

36)

37)

38)

39) Aproblemwiththeyieldondiscountbasisisthatit________theyieldtomaturity,andthis ________increases,the________thematurityofthediscountbond. A) overstates;overstatement;shorter B) understates;understatement;longer C) overstates;overstatement;longer D) understates;understatement;shorter 40) Thenominalinterestrateminustheexpectedrateofinflation A) isalessaccurateindicatorofthetightnessofcreditmarketconditionsthanisthenominal interestrate. B) definestherealinterestrate. C) definesthediscountrate. D) isalessaccuratemeasureoftheincentivestoborrowandlendthanisthenominalinterest rate. 41) Economistsfindnocompletelysatisfactorywaytomeasuremoneybecause A) themoneynessorliquidityofanassetisamatterofdegree. B) economistsfinddisagreementinterestingandrefusetoagreeforideologicalreasons. C) moneysupplystatisticsareastatesecret. D) theFederalReservedoesnotemployorreportdifferentmeasuresofthemoneysupply. 42) Forsimpleloans,thesimpleinterestrateis________theyieldtomaturity. A) notcomparableto B) lessthan C) greaterthan D) equalto 43) EvidencefrombusinesscyclefluctuationsintheUnitedStatesindicatesthat A) recessionshavebeenprecededbydollardepreciation. B) anegativerelationshipbetweenmoneygrowthandgeneraleconomicactivityexists. C) recessionshavebeenprecededbydeclinesinsharepricesonthestockexchange. D) recessionshavebeenprecededbyadeclineinthegrowthrateofmoney. 44) Iftherearefivegoodsinabartereconomy,oneneedstoknowtenpricesinordertoexchangeone goodforanother.If,however,therearetengoodsinabartereconomy,thenoneneedstoknow ________pricesinordertoexchangeonegoodforanother. A) 20 B) 25 C) 30 D) 45 45) OnelikelyexplanationfortherelativelyhighratesofinflationexperiencedinmanyLatin Americancountriesisthe A) budgetsurplusesmaintainedinthesecountries. B) declineinthepricesofbasiccommoditiesinthesecountries. C) relativelyrapidgrowthinthemoneysupplyinthesecountries. D) relativelyslowgrowthinthemoneysupplyinthesecountries. 46) Assumethatyouborrow$2000at10%annualinteresttofinanceanewbusinessproject.Forthis loantobeprofitable,theminimumamountthisprojectmustgenerateinannualearningsis A) $400. B) $201. C) $200. D) $199. 47) Whatisthereturnona5percentcouponbondthatinitiallysellsfor$1,000andsellsfor$1,200next year? A) 10percent B) 25percent C) -5percent D) 5percent

39)

40)

41)

42)

43)

44)

45)

46)

47)

48) Whenmoneypricesareusedtofacilitatecomparisonsofvalue,moneyissaidtofunctionasa A) payments-systemruler. B) storeofvalue. C) unitofaccount. D) mediumofexchange. 49) Papercurrencythathasbeendeclaredlegaltenderbutisnotconvertibleintocoinsorprecious metalsiscalled________money. A) commodity B) fiat C) funny D) electronic 50) IfanindividualredeemsaU.S.savingsbondforcurrency A) M1staysthesameandM2decreases. B) M1increasesandM2increases. C) M1staysthesameandM2staysthesame. D) M1increasesandM2staysthesame.

48)

49)

50)

AnswerKey Testname:EXAM1_SPRING2008

1) C 2) B 3) D 4) D 5) C 6) C 7) D 8) A 9) A 10) B 11) D 12) D 13) B 14) A 15) C 16) B 17) B 18) D 19) A 20) C 21) C 22) A 23) B 24) B 25) A 26) B 27) B 28) D 29) A 30) A 31) B 32) A 33) D 34) B 35) C 36) B 37) A 38) C 39) B 40) B 41) A 42) D 43) D 44) D 45) C 46) B 47) B 48) C 49) B 50) B 7

ECON3303

MoneyandBanking

Exam1

Prof.Crowder

Name__________________________________________________________

MULTIPLECHOICE.Choosetheonealternativethatbestcompletesthestatementoranswersthequestion. 1) Ifasecuritypays$110nextyearand$121theyearafterthat,whatisitsyieldtomaturityifitsells for$200? A) 9percent B) 10percent C) 11percent D) 12percent 2) Theyieldtomaturityis________thanthe________ratewhenthebondpriceis________itsface value. A) less;perpetuity;below B) greater;coupon;above C) greater;perpetuity;above D) greater;coupon;below 3) Iftherearefivegoodsinabartereconomy,oneneedstoknowtenpricesinordertoexchangeone goodforanother.If,however,therearetengoodsinabartereconomy,thenoneneedstoknow ________pricesinordertoexchangeonegoodforanother. A) 20 B) 25 C) 30 D) 45 4) Assumethatyouborrow$2000at10%annualinteresttofinanceanewbusinessproject.Forthis loantobeprofitable,theminimumamountthisprojectmustgenerateinannualearningsis A) $400. B) $201. C) $200. D) $199. 5) Whichofthefollowingbondswouldyouprefertobebuying? A) A$10,000face-valuesecuritywitha9percentcouponsellingfor$10,000 B) A$10,000face-valuesecuritywitha10percentcouponsellingfor$10,000 C) A$10,000face-valuesecuritywitha7percentcouponsellingfor$10,000 D) A$10,000face-valuesecuritywitha10percentcouponsellingfor$9,000 6) Whatisthereturnona5percentcouponbondthatinitiallysellsfor$1,000andsellsfor$1,200next year? A) 25percent B) -5percent C) 5percent D) 10percent 7) Whenmoneypricesareusedtofacilitatecomparisonsofvalue,moneyissaidtofunctionasa A) payments-systemruler. B) mediumofexchange. C) unitofaccount. D) storeofvalue. 8) Pricesandreturnsfor________bondsaremorevolatilethanthosefor________bonds,everything elseheldconstant. A) long-term;short-term B) short-term;short-term C) short-term;long-term D) long-term;long-term 9) Federalfundsare A) loansmadebytheFederalReserveSystemtobanks. B) loansmadebybankstotheFederalReserveSystem. C) loansmadebybankstoeachother. D) fundsraisedbythefederalgovernmentinthebondmarket. 1)

2)

3)

4)

5)

6)

7)

8)

9)

10) The________isthefinalamountthatwillbepaidtotheholderofacouponbond. A) discountvalue B) couponvalue C) facevalue D) presentvalue 11) Theprocesswherefinancialintermediariescreateandselllow-riskassetsandusetheproceedsto purchaseriskierassetsisknownas A) risksharing. B) riskselling. C) riskneutrality. D) riskaversion. 12) Anexaminationofrevisedmoneysupplystatistics,whencomparedtotheinitialstatistics, suggeststhattheinitialstatistics A) provideapoorguideofmonetarypolicybecausetheyareusuallyunderestimatesofthe revisedstatistics. B) donotprovideagoodguidetoshort-runmovementsinthemoneysupply. C) areprettygood. D) provideagoodguideofmonetarypolicy,thoughtheyareusuallyunderestimatesofthe revisedstatistics. 13) IntheUnitedStates,loansfrom________arefar________importantforcorporatefinancethan aresecuritiesmarkets. A) governmentagencies;less B) governmentagencies;more C) financialintermediaries;more D) financialintermediaries;less 14) Ifanindividualmovesmoneyfromasmall -denominationtimedeposittoademanddeposit account, A) M1staysthesameandM2staysthesame. B) M1staysthesameandM2increases. C) M1increasesandM2decreases. D) M1increasesandM2staysthesame. 15) Toaneconomist,________isanythingthatisgenerallyacceptedinpaymentforgoodsand servicesorintherepaymentofdebt. A) credit B) wealth C) money D) income 16) Adiscountbondsellingfor$15,000withafacevalueof$20,000inoneyearhasayieldtomaturity of A) 3percent. B) 20percent. C) 25percent. D) 33.3percent. 17) Whichofthefollowingcanbedescribedasinvolvingindirectfinance? A) YoubuyaU.S.TreasurybillfromtheU.S.Treasury. B) Youmakealoantoyourneighbor. C) Youbuysharesinamutualfund. D) Acorporationbuysashort-termsecurityissuedbyanothercorporationintheprimary market. 18) Aprofessionalbaseballplayermaybecontractuallyrestrictedfromskiing.Theteamowner includesthisclauseintheplayerscontracttoprotectagainst A) moralhazard. B) risksharing. C) regulatorycircumvention. D) adverseselection.

10)

11)

12)

13)

14)

15)

16)

17)

18)

19) OnelikelyexplanationfortherelativelyhighratesofinflationexperiencedinmanyLatin Americancountriesisthe A) declineinthepricesofbasiccommoditiesinthesecountries. B) relativelyrapidgrowthinthemoneysupplyinthesecountries. C) budgetsurplusesmaintainedinthesecountries. D) relativelyslowgrowthinthemoneysupplyinthesecountries. 20) Economistsfindnocompletelysatisfactorywaytomeasuremoneybecause A) economistsfinddisagreementinterestingandrefusetoagreeforideologicalreasons. B) themoneynessorliquidityofanassetisamatterofdegree. C) theFederalReservedoesnotemployorreportdifferentmeasuresofthemoneysupply. D) moneysupplystatisticsareastatesecret. 21) Fora3-yearsimpleloanof$10,000at10percent,theamounttoberepaidis A) $10,030. B) $10,300. C) $13,000. 22) IfanindividualredeemsaU.S.savingsbondforcurrency A) M1increasesandM2increases. B) M1increasesandM2staysthesame. C) M1staysthesameandM2decreases. D) M1staysthesameandM2staysthesame. 23) Thepricepaidfortherentalofborrowedfunds(usuallyexpressedasapercentageoftherentalof $100peryear)iscommonlyreferredtoasthe A) inflationrate. B) aggregatepricelevel. C) interestrate. D) exchangerate. 24) Anequalincreaseinallbondinterestrates A) decreasesthereturntoallbondmaturitiesbyanequalamount. B) increasesthereturntoallbondmaturitiesbyanequalamount. C) hasnoeffectonthereturnstobonds. D) decreaseslong-termbondreturnsmorethanshort-termbondreturns. 25) Ofmoneysthreefunctions,theonethatdistinguishesmoneyfromotherassetsisitsfunctionasa A) storeofvalue. B) unitofaccount. C) standardofdeferredpayment. D) mediumofexchange. 26) Bondsthataresoldinaforeigncountryandaredenominatedinacurrencyotherthanthatofthe countryinwhichitissoldareknownas A) countrybonds. B) equitybonds. C) foreignbonds. D) Eurobonds. 27) Whenstockpricesfall A) abusinessfirmwillbemorelikelytosellstocktofinanceinvestmentspending. B) anindividualswealthmaydecreaseandtheirwillingnesstospendmaydecrease. C) anindividualswealthisnotaffectednoristheirwillingnesstospend. D) anindividualswealthmaydecreasebuttheirwillingnesstospendisnotaffected. 28) Long-termdebthasamaturitythatis__________. A) tenyearsorlonger. C) betweenfiveandtenyears.

19)

20)

21) D) $13,310. 22)

23)

24)

25)

26)

27)

28) B) lessthanayear. D) betweenoneandtenyears.

29) Abondthatisboughtatapricebelowitsfacevalueandthefacevalueisrepaidatamaturitydate iscalleda A) simpleloan. B) fixed-paymentloan. C) discountbond. D) couponbond. 30) Thehigherasecurityspriceinthesecondarymarketthe_________fundsafirmcanraiseby sellingsecuritiesinthe_________market. A) more;primary B) less;secondary C) less;primary D) more;secondary 31) An$8,000couponbondwitha$400couponpaymenteveryyearhasacouponrateof A) 5percent. B) 8percent. C) 10percent. D) 40percent. 32) Theprimarypurposeofdepositinsuranceisto A) preventbankingpanics. B) improvetheflowofinformationtoinvestors. C) protectbankemployeesfromunemployment. D) protectbankshareholdersagainstlosses. 33) Aproblemwiththeyieldondiscountbasisisthatit________theyieldtomaturity,andthis ________increases,the________thematurityofthediscountbond. A) overstates;overstatement;shorter B) overstates;overstatement;longer C) understates;understatement;shorter D) understates;understatement;longer 34) Ifbadcreditrisksaretheoneswhomostactivelyseekloansand,therefore,receivethemfrom financialintermediaries,thenfinancialintermediariesfacetheproblemof A) free-riding. B) moralhazard. C) adverseselection. D) costlystateverification. 35) Moneymarketmutualfundsharesfunctionlike A) checkingaccountsthatpayinterest. C) currency. 36) Theprimaryliabilitiesofacreditunionare A) mortgages. C) deposits.

29)

30)

31)

32)

33)

34)

35) B) stocks. D) bonds. 36) B) commercialloans. D) bonds. 37)

37) Theconversionofabartereconomytoonethatusesmoney A) increasesefficiencybyreducingtheneedtospecialize. B) increasesefficiencybyreducingtransactionscosts. C) doesnotincreaseeconomicefficiency. D) increasesefficiencybyreducingtheneedtoexchangegoodsandservices. 38) Well-functioningfinancialmarkets A) causefinancialcrises. C) eliminatetheneedforindirectfinance.

38) B) produceanefficientallocationofcapital. D) causeinflation. 39)

39) Budgetsdeficitscanbeaconcernbecausetheymight A) ultimatelyleadtohigherinflation. B) leadtolowerinterestrates. C) leadtohigherbondprices. D) leadtoaslowerrateofmoneygrowth. 4

40) Animportantfunctionofsecondarymarketsisto A) raisefundsforcorporationsthroughthesaleofsecurities. B) createamarketfornewlyconstructedhouses. C) makeiteasierforgovernmentstoraisetaxes. D) makeiteasiertosellfinancialinstrumentstoraisefunds. 41) Whenaninvestmentbank________securities,itguaranteesapriceforacorporationssecurities andthensellsthemtothepublic. A) underwrites B) undertakes C) overwrites D) overtakes 42) Inwhichofthefollowingsituationswouldyouprefertobeborrowing? A) Theinterestrateis9percentandtheexpectedinflationrateis7percent. B) Theinterestrateis4percentandtheexpectedinflationrateis1percent. C) Theinterestrateis25percentandtheexpectedinflationrateis50percent. D) Theinterestrateis13percentandtheexpectedinflationrateis15percent. 43) Banksareimportanttothestudyofmoneyandtheeconomybecausethey A) channelfundsfrominvestorstosavers. B) havebeenasourceofrapidfinancialinnovation. C) createinflation. D) aretheonlyimportantfinancialinstitutionintheU.S.economy. 44) Adisadvantageof________isthatitisveryheavyandhardtotransportfromoneplaceto another. A) electronicmoney B) papermoney C) fiatmoney D) commoditymoney 45) Papercurrencythathasbeendeclaredlegaltenderbutisnotconvertibleintocoinsorprecious metalsiscalled________money. A) electronic B) commodity C) funny D) fiat 46) Financialmarketspromoteeconomicefficiencyby A) channelingfundsfromsaverstoinvestors. B) reducinginvestment. C) creatinginflation. D) channelingfundsfrominvestorstosavers. 47) EvidencefrombusinesscyclefluctuationsintheUnitedStatesindicatesthat A) recessionshavebeenprecededbydollardepreciation. B) recessionshavebeenprecededbydeclinesinsharepricesonthestockexchange. C) recessionshavebeenprecededbyadeclineinthegrowthrateofmoney. D) anegativerelationshipbetweenmoneygrowthandgeneraleconomicactivityexists. 48) Financialinstitutionsthatacceptdepositsandmakeloansarecalled________institutions. A) depository B) underwriting C) contractualsavings D) investment

40)

41)

42)

43)

44)

45)

46)

47)

48)

49) Thenominalinterestrateminustheexpectedrateofinflation A) isalessaccurateindicatorofthetightnessofcreditmarketconditionsthanisthenominal interestrate. B) definesthediscountrate. C) isalessaccuratemeasureoftheincentivestoborrowandlendthanisthenominalinterest rate. D) definestherealinterestrate. 50) Forsimpleloans,thesimpleinterestrateis________theyieldtomaturity. A) notcomparableto B) greaterthan C) lessthan D) equalto

49)

50)

AnswerKey Testname:EXAM1_SPRING2008

1) B 2) D 3) D 4) B 5) D 6) A 7) C 8) A 9) C 10) C 11) A 12) B 13) C 14) D 15) C 16) D 17) C 18) A 19) B 20) B 21) D 22) A 23) C 24) D 25) D 26) D 27) B 28) A 29) C 30) A 31) A 32) A 33) D 34) C 35) A 36) C 37) B 38) B 39) A 40) D 41) A 42) C 43) B 44) D 45) D 46) A 47) C 48) A 49) D 50) D 7