CFA Book 1 Chapter 1 Questions And
Answers With Verified Solutions 100%
Correct!!!
Interest Rates - ANSWER✔✔Are our measure of the time value of money,
although risk differences in financial securities lead to differences in their
equilibrium interest rates
Equilibrium Interest rates - ANSWER✔✔Required rate of return for a particular
investment
Requires rate of return - ANSWER✔✔Interest rates & Discount rates
real risk-free rate - ANSWER✔✔The interest rate that would exist on a risk-free
security if no inflation were expected. (nominal interest rate - inflation premium)
Nominal Risk Free Rate - ANSWER✔✔real risk-free rate + expected inflation rate
required interest rate on a security - ANSWER✔✔nominal risk free rate + default
risk premium + liquidity premium + maturity risk premium
Effective Annual Rate (EAR) - ANSWER✔✔the interest rate expressed as if it
were compounded once per year (1 + (rate/ # of compounding periods))^number of
compounding periods-1
EAR=(1+Periodic rate)^m-1
Answers With Verified Solutions 100%
Correct!!!
Interest Rates - ANSWER✔✔Are our measure of the time value of money,
although risk differences in financial securities lead to differences in their
equilibrium interest rates
Equilibrium Interest rates - ANSWER✔✔Required rate of return for a particular
investment
Requires rate of return - ANSWER✔✔Interest rates & Discount rates
real risk-free rate - ANSWER✔✔The interest rate that would exist on a risk-free
security if no inflation were expected. (nominal interest rate - inflation premium)
Nominal Risk Free Rate - ANSWER✔✔real risk-free rate + expected inflation rate
required interest rate on a security - ANSWER✔✔nominal risk free rate + default
risk premium + liquidity premium + maturity risk premium
Effective Annual Rate (EAR) - ANSWER✔✔the interest rate expressed as if it
were compounded once per year (1 + (rate/ # of compounding periods))^number of
compounding periods-1
EAR=(1+Periodic rate)^m-1
