money-and-bank-test-bank-chap04

1TheEconomicsofMoney,Banking,andFinancialMarkets,9e(Mishkin)Chapter4UnderstandingInterestRates4.1MeasuringInterestRates1)Theconceptof________isbasedonthecommon-sensenotionthatadollarpaidtoyouinthefutureislessvaluabletoyouthanadollartoday.A)presentvalueB)futurevalueC)interestD)deflationAnswer:AQuesStatus:PreviousEdition2)Thepresentvalueofanexpectedfuturepayment________astheinterestrateincreases.A)fallsB)risesC)isconstantD)isunaffectedAnswer:AQuesStatus:PreviousEdition3)Anincreaseinthetimetothepromisedfuturepayment________thepresentvalueofthepayment.A)decreasesB)increasesC)hasnoeffectonD)isirrelevanttoAnswer:AQuesStatus:PreviousEdition4)Withaninterestrateof6percent,thepresentvalueof$100nextyearisapproximatelyA)$106.B)$100.C)$94.D)$92.Answer:CQuesStatus:PreviousEdition5)Ifasecuritypays$55inoneyearand$133inthreeyears,itspresentvalueis$150iftheinterestrateisA)5percent.B)10percent.C)12.5percent.D)15percent.Answer:BQuesStatus:PreviousEdition26)Toclaimthatalotterywinnerwhoistoreceive$1millionperyearfortwentyyearshaswon$20millionignorestheprocessofA)facevalue.B)parvalue.C)deflation.D)discountingthefuture.Answer:DQuesStatus:Revised7)AcreditmarketinstrumentthatprovidestheborrowerwithanamountoffundsthatmustberepaidatthematuritydatealongwithaninterestpaymentisknownasaA)simpleloan.B)fixed-paymentloan.C)couponbond.D)discountbond.Answer:AQuesStatus:PreviousEdition8)AcreditmarketinstrumentthatrequirestheborrowertomakethesamepaymenteveryperioduntilthematuritydateisknownasaA)simpleloan.B)fixed-paymentloan.C)couponbond.D)discountbond.Answer:BQuesStatus:PreviousEdition9)Whichofthefollowingaretrueoffixedpaymentloans?A)Theborrowerrepaysboththeprincipalandinterestatthematuritydate.B)Installmentloansandmortgagesarefrequentlyofthefixedpaymenttype.C)Theborrowerpaysinterestperiodicallyandtheprincipalatthematuritydate.D)Commercialloanstobusinessesareoftenofthistype.Answer:BQuesStatus:PreviousEdition10)AfullyamortizedloanisanothernameforA)asimpleloan.B)afixed-paymentloan.C)acommercialloan.D)anunsecuredloan.Answer:BQuesStatus:PreviousEdition311)AcreditmarketinstrumentthatpaystheownerafixedcouponpaymenteveryyearuntilthematuritydateandthenrepaysthefacevalueiscalledaA)simpleloan.B)fixed-paymentloan.C)couponbond.D)discountbond.Answer:CQuesStatus:PreviousEdition12)A________paystheownerafixedcouponpaymenteveryyearuntilthematuritydate,whenthe________valueisrepaid.A)couponbond;discountB)discountbond;discountC)couponbond;faceD)discountbond;faceAnswer:CQuesStatus:PreviousEdition13)The________isthefinalamountthatwillbepaidtotheholderofacouponbond.A)discountvalueB)couponvalueC)facevalueD)presentvalueAnswer:CQuesStatus:PreviousEdition14)Whentalkingaboutacouponbond,facevalueand________meanthesamething.A)parvalueB)couponvalueC)amortizedvalueD)discountvalueAnswer:AQuesStatus:New15)Thedollaramountoftheyearlycouponpaymentexpressedasapercentageofthefacevalueofthebondiscalledthebond'sA)couponrate.B)maturityrate.C)facevaluerate.D)paymentrate.Answer:AQuesStatus:New416)Ifa$5,000couponbondhasacouponrateof13percent,thenthecouponpaymenteveryyearisA)$650.B)$1,300.C)$130.D)$13.Answer:AQuesStatus:PreviousEdition17)An$8,000couponbondwitha$400couponpaymenteveryyearhasacouponrateofA)5percent.B)8percent.C)10percent.D)40percent.Answer:AQuesStatus:PreviousEdition18)AllofthefollowingareexamplesofcouponbondsexceptA)CorporatebondsB)U.S.TreasurybillsC)U.S.TreasurynotesD)U.S.TreasurybondsAnswer:BQuesStatus:PreviousEdition19)AbondthatisboughtatapricebelowitsfacevalueandthefacevalueisrepaidatamaturitydateiscalledaA)simpleloan.B)fixed-paymentloan.C)couponbond.D)discountbond.Answer:DQuesStatus:PreviousEdition20)A________isboughtatapricebelowitsfacevalue,andthe________valueisrepaidatthematuritydate.A)couponbond;discountB)discountbond;discountC)couponbond;faceD)discountbond;faceAnswer:DQuesStatus:PreviousEdition521)AdiscountbondA)paysthebondholderafixedamounteveryperiodandthefacevalueatmaturity.B)paysthebondholderthefacevalueatmaturity.C)paysallinterestandthefacevalueatmaturity.D)paysthefacevalueatmaturityplusanycapitalgain.Answer:BQuesStatus:PreviousEdition22)ExamplesofdiscountbondsincludeA)U.S.Treasurybills.B)corporatebonds.C)U.S.Treasurynotes.D)municipalbonds.Answer:AQuesStatus:PreviousEdition23)Whichofthefollowingaretruefordiscountbonds?A)Adiscountbondisboughtatpar.B)Thepurchaserreceivesthefacevalueofthebondatthematuritydate.C)U.S.Treasurybondsandnotesareexamplesofdiscountbonds.D)Thepurchaserreceivestheparvalueatmaturityplusanycapitalgains.Answer:BQuesStatus:PreviousEdition24)TheinterestratethatequatesthepresentvalueofpaymentsreceivedfromadebtinstrumentwithitsvaluetodayistheA)simpleinterestrate.B)currentyield.C)yieldtomaturity.D)realinterestrate.Answer:CQuesStatus:PreviousEdition25)Economistsconsiderthe________tobethemostaccuratemeasureofinterestrates.A)simpleinterestrate.B)currentyield.C)yieldtomaturity.D)realinterestrate.Answer:CQuesStatus:PreviousEdition26)Forsimpleloans,thesimpleinterestrateis________theyieldtomaturity.A)greaterthanB)lessthanC)equaltoD)notcomparabletoAnswer: