What is the present value of $$1000,$ payable in $20$ years, if the interest rate is currently $7\mathrm{.}00\%?($Assume annual compounding.$)$ Give answer to nearest $$\mathrm{.}01$:

Question $1$ options:

A$.$ $$258\mathrm{.}42$

B$.$ $$316\mathrm{.}17$

C$.$ $$934\mathrm{.}58$

D$.$ $$1070\mathrm{.}00$

E$.$ $$3869\mathrm{.}68$

Question $2(5$ points$)$

If the present value of $$1000,$ payable in $20$ years, is $$542\mathrm{.}05,$ what is the current interest rate?

Question $2$ options:

A$.1\mathrm{.}34\%$

B$.2\mathrm{.}98\%$

C$.3\mathrm{.}11\%$

D$.4\mathrm{.}37\%$

E$.5\mathrm{.}42\%$

Question $3(5$ points$)$

What is the present value of a perpetual payment stream of $$1000$ per year, if the nominal interest rate is $5\%$ and the real interest rate is $2\%?$

Question $3$ options:

A$.$ $$20$

B$.$ $$50$

C$.$ $$20,000$

D$.$ $$50,000$

E$.$ infinity

Question $4(5$ points$)$

A rise in bond yields will cause bond prices to

Question $4$ options:

A$.$ rise, and moreso the longer their maturity

B$.$ rise, and moreso the shorter their maturity

C$.$ fall, and moreso the longer their maturity

D$.$ fall, and moreso the shorter their maturity

E$.$ neither rise nor fall, so long as their coupon rates are fixed

Question $5(5$ points$)$

If a bond that has annual coupons of $$5\mathrm{.}25$ per $$100$ of face value has a yield to maturity of $6\mathrm{.}32\%,$ it must be selling

Question $5$ options:

A$.$ At par

B$.$ Above par

C$.$ Below par

D$.$ Can't tell without more information

E$.$ Wrong answer

Question $6(5$ points$)$

If a bond has a final maturity of $30$ years and a duration of $20$ years, and interest rates rise by $0\mathrm{.}1$ percentage point $(10$ basis points$),$ its market value will

Question $6$ options:

A$.$ Increase by about $3\%$

B$.$ Decrease by about $3\%$

C$.$ Increase by about $2\%$

D$.$ Decrease by about $2\%$

E$.$ Not change, since a bond's coupon payments are contractually fixed

Question $7(5$ points$)$

If an amortized loan and a coupon bond both have the same final maturity m$,$ which will have the longer duration D$?$

Question $7$ options:

A$.$ The amortized loan

B$.$ The coupon bond

C$.$ Both will have the same duration

D$.$ Duration is undefined for amortized loans

E$.$ Duration is undefined for coupon bonds

Question $8(5$ points$)$

When interest rates are in the range $1\%$ to $6\%,$ the duration of a $30-$year amortized loan is in the range

Question $8$ options:

A$.20-30$ years

B$.15\mathrm{.}5-20$ years

C$.10-15\mathrm{.}5$ years

D$.5\mathrm{.}5-10$ years

E$.30$ years precisely

Question $9(5$ points$)$

According to the Fisher Equation, if the nominal interest rate is $8\%,$ and the public expects $6\%$ inflation, the real interest rate must be

Question $9$ options:

A$.0\%$

B$.2\%$

C$.6\%$

D$.8\%$

E$.14\%$

Question $10(5$ points$)$

According to the Fisher Equation, if the nominal interest rate is $7\%$ and the real interest rate is $2\%,$ expected inflation must be

Question $10$ options:

A$.0\%$

B$.2\%$

C$.5\%$

D$.7\%$

E$.9\%$

Question $11(5$ points$)$

According to the Fisher Equation, if the real interest rate is $3\%$ and the public expects $6\%$ inflation, the nominal interest rate must be

Question $11$ options:

A$.0\%$

B$.3\%$

C$.6\%$

D$.9\%$

E$.18\%$

Question $12(5$ points$)$

What is the present value of a perpetual payment stream of $$1000$ per year, indexed for inflation from today's date, if the nominal interest rate is $5\%$ and the real interest rate is $2\%?$

Question $12$ options:

$$20$

$$50$

$$20,000$

$$50,000$

Infinity

Question $13(5$ points$)$

According to Adaptive Learning $($the modern generalization of Adaptive Expectations$),$ inflationary expectations roughly equal

Question $13$ options:

A$.$ the monetary expansion rate minus the average growth rate of real income

B$.$ the most recently observed monthly inflation rate, expressed to an annual rate

C$.$ an equally$-$weighted average of inflation over each agent's lifetime

D$.$ a weighted average of past inflation, with greatest weight on the most recent past

E$.$ a weighted average of past inflation, with greatest weight on the most distant past

Question $14(5$ points$)$

From $2003-2009,$ explicit real rates on $10-$year TIPS were primarily in the range

Question $14$ options:

A$.0\mathrm{.}5\%$ or less

B$.0\mathrm{.}5-1\mathrm{.}5\%$

C$.1\mathrm{.}5-2\mathrm{.}5\%$

D$.2\mathrm{.}5-3\mathrm{.}5\%$

E$.3\mathrm{.}5\%$ or more

Question $15(5$ points$)$

Explicit real interest rates on $10-$year TIPS were negative during

Question $15$ options:

A$.2004-05$

B$.2006-07$

C$.2018-19$

D$.2020-21$

E$.$ Real interest rates can never be negative

Question $16(5$ points$)$

When the quantity of credit is on the horizontal axis and the real interest rate is on the vertical axis, a decrease in savings behavior by household will tend to

Question $16$ options:

A$.$ Shift the supply of credit to the left and reduce real interest rates

B$.$ Shift the supply of credit to the left and increase real interest rates

C$.$ Shift the demand for credit to the left and reduce real interest rates

D$.$ Shift the demand for credit to the left and increase real interest rates

E$.$ None of the above $$ the relevant schedule will shift to the right

Question $17(5$ points$)$

Real interest rates on US $10-$year Treasury bonds, as inferred from the Fisher Equation and assuming Adaptive Learning were highest during

Question $17$ options:

A$.$ the early $1960$s

B$.$ the late $1960$s

C$.$ the late $1970$s

D$.$ the early $1980$s

E$.$ the late $1980$s