Name: ID: A Multiple Choice the choice that best completes the statement or answers the question 25. Suppose you have $1.425 and plan to purchase a 5-year certificate of deposit (CD) that pays 35% intere compounded annually. How much will you have when the CD matures? a. $1,692.45. b. $1,827.85 C. $1,709.38 d. $1,810.92 26, suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant per year. What is the real risk-free rate of return, r*? Disregard any cross-product terms, ie, if aver required, use the arithmetic average. a. 2.70% b. 2.03% c. d. 2.13% 2.50% 27. Which of the following statements is CORRECT? The proportion of the payment that goes toward interest on a fully amortized loan a. increases over time. b. If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different. c. An investment that has anominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%. d. The present value of a 3-year, S150 annuity due will exceed the present value of a 3-year $150 ordinary annuity. Which of the following statements is CORRECT? a. 28. Home mortgage loans are traded in the money market. b. While the distinctions are blurring, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties Capital markets deal only with common stocks and other equity securities. The New York Stock Exchange is an auction market, and it has a physical location. c. d. Which of the following statements is CORRECT? a. The cash flows for an annuity due must all occur at the beginning of the periods. b. If a series of unequal cash flows occurs at regular intervals, such as once a year, ther 29. series is by definition an annuity The cash flows for an annuity may vary from period to period, but they must occur regular intervals, such as once a year or once a month. If some cash flows occur at the beginning of the periods while others occur at the then we have what the textbook defines as a yariable annuity c. d