QUESTION $17$

in $10$ installments, but the installments increase by $5$ percent per year. Who got the better deal?

The better deal is the one with equal installments.

The better deal is one with installments that increase $5$ percent per year

QUESTION $18$

Should lending laws be changed to require lenders to report EARs instead of APRs? Why or Why not?

No$,$ they should not. APRs generally provide the relevant rate. They are easy to compute and save the consumer time.

The laws should make it optional for companies to display either metric. Both allow the easy comparison interest rates for competing loan products.

QUESTION $19$

A freshman does. The reason is that the freshman gets to use the money for much longer before interest starts to accrue

A senior does. The reason is that the senior gets to use the money for much longer before interest starts to accrue.

QUESTION $20$

Is it true that a U$.$S$.$ Treasury is risk free?

No$.$ As interest rates fluctuate, the value of a Treasury security will fluctuate. Long$-$term Treasury securities have substantial interest rate risk.

Yes. The Federal Reserve has the ability to increase the money supply without restriction. This ability prevents the United States from ever defaulting on its debt obligation.

QUESTION $21$

Which has greater interest rate risk, a $30-$year Treasury bond or a $30-$year corporate bond?

All else the same, the Treasury security will have lower coupons because of its lower default risk, so it will have greater interest rate risk.

All else the same, the Corporate security will have lower coupons because of its lower default risk, so it will have greater interest rate risk.

Both securities have the same amount of interest rate risk.