Practice Questions Quiz #2 (BCOR 2204)
1. rate of interest creates equilibrium between the supply of
savings and the demand for investment funds.
A) Nominal
B) Real
C) Risk-free
D) Inflationary: B
2. rate of interest is the actual rate charged by the supplier and
paid by the demander of funds.
A) Nominal
B) Real
C) Risk-free
D) Inflationary: A
3.A(n) yield curve reflects lower expected future rates of interest.
A) upward-sloping
B) flat
C) downward-sloping
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, D) linear: C
4.The key inputs to the valuation process include .
A) returns and risk
B) cash flow, cash flow timing, and risk
C) cash flows and discount rate
D) returns, discount rate, and risk: B
5.Bonds which sell at less than face value are priced at a ,
while bonds which sell at greater than face value sell at a .
A) par;
premiumB)
discount; par
C) discount; premium
D) coupon; premium: C
6.A bond will sell when the stated rate of interest exceeds the
required rate of return, when the stated rate of interest is less than
the required return, and when the stated rate of interest is equal to
the required return.
A) at a premium; at a discount; equal to the par value
B) at a premium; equal to the par value; at a discount
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1. rate of interest creates equilibrium between the supply of
savings and the demand for investment funds.
A) Nominal
B) Real
C) Risk-free
D) Inflationary: B
2. rate of interest is the actual rate charged by the supplier and
paid by the demander of funds.
A) Nominal
B) Real
C) Risk-free
D) Inflationary: A
3.A(n) yield curve reflects lower expected future rates of interest.
A) upward-sloping
B) flat
C) downward-sloping
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, D) linear: C
4.The key inputs to the valuation process include .
A) returns and risk
B) cash flow, cash flow timing, and risk
C) cash flows and discount rate
D) returns, discount rate, and risk: B
5.Bonds which sell at less than face value are priced at a ,
while bonds which sell at greater than face value sell at a .
A) par;
premiumB)
discount; par
C) discount; premium
D) coupon; premium: C
6.A bond will sell when the stated rate of interest exceeds the
required rate of return, when the stated rate of interest is less than
the required return, and when the stated rate of interest is equal to
the required return.
A) at a premium; at a discount; equal to the par value
B) at a premium; equal to the par value; at a discount
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