14. The security with the highest liquidity premium is a. 10- Year A- rated Corporate Bond maturing in 2022, actively traded on the Chicago Stock Exchange b. 30-Year U.S. Government Treasury Bond maturing in 2028 c. 25-Year AAA-rated Corporate Bond maturing in 2030, actively traded on the New York Exchange d. 10-Year AA-rated Corporate Bond maturing in 2020, thinly traded on a regional exchange e. 3-Month U.S. Treasury Bill 15. The four most fundamental factors that affect the cost of money are (1) production opportunities, (2) time preferences for consumption, (3) risk, and (4) inflation. a. True b. False 16. The security with the highest maturity premium is a. A- rated Corporate Bond maturing in 2022, actively traded on the Chicago Stock Exchange b. U.S. Government Treasury Bond maturing in 2028 c. AAA-rated Corporate Bond maturing in 2030, actively traded on the New York Exchange d. AA-rated Corporate Bond maturing in 2020, thinly traded on a regional exchange e. 3-Month U.S. Treasury Bill 17. Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 6.00% per year. What is the real risk-free rate of return, r"? Disregard any cross- product terms, i.e., if averaging is required, use the arithmetic average. a. 0.82% b. 1.15% c. 0.97% d. 0.85% e. 1.00% 18. The future value (FV) of a single cash flow increases as the discount rate per year increases, other things held constant. a. True b. False