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Part 1: Multiple Choice Questions 1. As the interest rate increases, the present value of an expected future payment. A) falls B) rises C)
Part 1: Multiple Choice Questions 1. As the interest rate increases, the present value of an expected future payment. A) falls B) rises C) is constant D) is unaffected [1 point each] 2. A $9000 coupon bond with a $400 coupon payment every year for 5 years has a coupon rate of A) 5 percent B) 8 percent C) 9 percent D) 4.4 percent 3. An asset's interest rate risk A) increases; decreases as the duration of the asset B) decreases; decreases C) decreases; increases D) remains constant; increases 4. According to Forbes, recently, Bill Gates's net worth was estimated at $130.4 billion. That's an awful lot of: A) money B) wealth C) income D) none of the above 5. If prices are falling in the economy A) the nominal interest rate will be less than the real interest rate B) the nominal interest rate will be equal to the real interest rate C) the nominal interest rate will be greater than the real interest rate D) we can reach no conclusion about nominal and real interest rates 6. Which of the following can be described as involving direct finance? A) People buy bonds from a corporation. B) People buy shares in a mutual fund. ECON 210-2 C) A pension fund manager buys a short-term corporate security in the secondary market. D) People pay premiums to an insurance company
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