Interest Rates, Rate Changes, & Risk Structure Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. If the yield on long-term securities is greater than the yield on comparable short-term securities, the yield curve is

Question 2 2. Which of the statements is correct about the expectations theory to the term structure of interest rates?

Question 3 3. You loan a friend $10,000 at a rate of interest at 5% and the rate of inflation for the year is 6%. What is the real rate of interest?

Question 4 4. Which of the following is the best explanation of the real interest rate?

Question 5 5. In order to adjust a nominal interest rate for inflation, which of the following formula should be used?

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Question 6 6. Which of the following is FALSE regarding real interest rates?

Question 7 7. How does the FOMC impact the actual Federal Funds Rate?

Question 8 8. According to this lesson, what is the definition of the Federal Funds Rate?

Question 9 9. In 1970, McDonald's Big Mac costs around $0.50. By early 2015, the price of the sandwich was at $4.79. This change in cost is an example of:

Question 10 10. What is the relationship between a borrower's credit score and their interest rate on a loan?

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Question 11 11. As she enters college, Amy puts $500 in a savings account that earns 3.5% simple interest. At the end of 4 years, how much will be in the account?

Question 12 12. Arnold invested $7000 in his account and he had $8050 after 4 years. What was the interest rate?

Question 13 13. What kinds of loans are associated with long-term interest rates?

Question 14 14. Of the following, which are you most likely to loan money to with the lower interest rate if any at all?

Question 15 15. When interest rates are 20%, the demand for money is:

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Question 16 16. What happens when there is an increase in the demand for money when the supply of money is unchanged?

Question 17 17. Which of the following statements is FALSE regarding the discount rate?

Question 18 18. Which of the following accurately describes the discount rate?

Question 19 19. Which of the following provides a loan to a company or government?

Question 20 20. Which of the following provides ownership in the most companies?

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Question 21 21. The concern in reinvestment rate risk is:

Question 22 22. Two strategies for mitigating interest rate risk that don't depend on the types of bonds purchased are:

Question 23 23. The Fed's monetary policy has the greatest effect on real Gross Domestic Product under what set of conditions?

Question 24 24. If the Federal Reserve suddenly decreases the growth rate of the money supply from 6% to 4% per year, what is likely to happen to aggregate demand and real Gross Domestic Product in the short-run?

Question 25 25. What's the formula for a lender to set it's nominal interest rate?

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Question 26 26. If you know the principal of the loan, the interest due on the loan at maturity, and the applicable unit of time for calculating interest, what formula can you use to calculate the interest rate?

Question 27 27. Which is true about the segmented markets theory?

Question 28 28. You loan a friend $10,000 at a 5% rate of interest for one year. Inflation for the year is 3%. What's the real rate of interest?

Question 29 29. The real interest rate for a consumer loan is 5%, and the expected inflation rate is 3%. What is the nominal interest rate on this consumer loan?

Question 30 30. How is the Federal Funds Rate used?

Interest Rates, Rate Changes, & Risk Structure Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Finance 303: Financial Institutions & Markets  /  Business Courses
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