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

Question 2 2. Berto wants to invest in a company but he also wants some amount of control of the operations. Why would Berto choose common stocks?

Question 3 3. What is the name of the organization within the Federal Reserve Bank that sets the Federal Funds Rate?

Question 4 4. How is the Federal Funds Rate used?

Question 5 5. Two types of bonds that were designed to eliminate reinvestment rate risk are:

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Question 6 6. The primary reason to use financial futures contracts in hedging strategies is:

Question 7 7. Which of the following is the best explanation of the real interest rate?

Question 8 8. What does the real interest rate tell you?

Question 9 9. What happens when there is an increase in the demand for money when the supply of money is unchanged?

Question 10 10. When interest rates are 20%, the demand for money is:

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Question 11 11. Steve is trying to earn $300 in interest for a new guitar. He puts $2500 in an account that earns 2% interest. How long will it take to earn $300?

Question 12 12. 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 13 13. Which statement BEST summarizes the history of interest rates?

Question 14 14. Which of the following is NOT a factor in the determination of an interest rate on borrowed money?

Question 15 15. The Fed's monetary policy has the greatest effect on real Gross Domestic Product under what set of conditions?

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Question 16 16. How would economists graphically illustrate a decrease in the money supply?

Question 17 17. Which of the following is FALSE regarding real interest rates?

Question 18 18. In the country of Athenia, banks charge 10% interest on all loans. If the general price level has been increasing at a rate of 2% per year, what is the real rate of interest in Athenia?

Question 19 19. Which is true about the segmented markets theory?

Question 20 20. Which of the statements is correct about the expectations theory to the term structure of interest rates?

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Question 21 21. If you take out a loan for $50,000 with a maturity date of 5 years and will pay $10,000 in interest, what is the annual nominal interest rate?

Question 22 22. What's the formula for a lender to set it's nominal interest rate?

Question 23 23. Which of the following accurately describes the discount rate?

Question 24 24. Which of the following statements is FALSE regarding the discount rate?

Question 25 25. Which of the following is a sign that there is something wrong with the economy?

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Question 26 26. What kinds of loans are associated with a short-term interest rate?

Question 27 27. How is real interest calculated?

Question 28 28. What is the current target Federal Funds Rate?

Question 29 29. Two strategies for mitigating interest rate risk that don't depend on the types of bonds purchased are:

Question 30 30. 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?

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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