D076 Unit 3 Question and answers
already passed 2025/2026
Which type of interest rate includes interest on interest in addition to interest on the principal? - correct
answer ✔Compound interest
What is the rate at which the average price level of particular goods and services in an economy
increases over a period of time? - correct answer ✔Inflation rate
You signed an apartment contract today. You are going to pay $1,500 at the beginning of each month
for the next 12 months, starting today. What type of cash flows is this contract? - correct answer ✔An
annuity due
What is the term for the return over the entire period that an investor owns a financial security? -
correct answer ✔Holding period return
What is used to measure total risk? - correct answer ✔Standard deviation
What is the term for the risk that changes in interest rates will impact the value of a bond? - correct
answer ✔Interest rate risk
What is another name for the cost of capital? - correct answer ✔Discount rate
What is the name for the minimum rate of return that an investor or lender will accept for investments?
- correct answer ✔Required rate of return
The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real interest
rate? - correct answer ✔5%
already passed 2025/2026
Which type of interest rate includes interest on interest in addition to interest on the principal? - correct
answer ✔Compound interest
What is the rate at which the average price level of particular goods and services in an economy
increases over a period of time? - correct answer ✔Inflation rate
You signed an apartment contract today. You are going to pay $1,500 at the beginning of each month
for the next 12 months, starting today. What type of cash flows is this contract? - correct answer ✔An
annuity due
What is the term for the return over the entire period that an investor owns a financial security? -
correct answer ✔Holding period return
What is used to measure total risk? - correct answer ✔Standard deviation
What is the term for the risk that changes in interest rates will impact the value of a bond? - correct
answer ✔Interest rate risk
What is another name for the cost of capital? - correct answer ✔Discount rate
What is the name for the minimum rate of return that an investor or lender will accept for investments?
- correct answer ✔Required rate of return
The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real interest
rate? - correct answer ✔5%
