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Homework 2
MC Questions
MULTIPLE CHOICE.
Choose the one alternative that best completes the statement or answers
the question.
1)
The concept of ________ is based on the common

sense notion that a
dollar paid to you in the future is less valuable to you than a dollar
today.
1)
_______
A)
future value
B)
interest
C)
deflation
D)
present value
2)
With an interest rate of 6 percent, the present value of $100 next year is
approximately
2)
_______
A)
$106.
B)
$100.
C)
$94.
D)
$92.
3)
An increase in the time to the promised future payment ________ the
present value of the payment.
3)
_______
A)
decreases
B)
is irrelevant to
C)
increases
D)
has no effect on
4)
If the amount payable in two years is $2420 for a simple loan at 10
percent interest, the loan amount is
4)
_______
A)
$1000.
B)
$1210.
C)
$2000.
D)
$2200.
5)
A ________ pays the owner a fixed coupon payment every year until the
maturity date, when the ________ value is repaid.
5)
_______
A)
coupon bond; discount
B)
coupon bond; face
C)
discount bond; discount
D)
discount bond; face
6)
An $8,000 face coupon bond with a $400 coupon payment every year
has a coupon rate of
6)
_______
A)
5 percent.
B)
8 percent.
C)
10 percent.
D)
40 percent.
7)
Which of the following $1,000 face

value securities has the lowest yield
to maturity?
7)
_______
A)
A 15 percent coupon bond selling for $1,000
B)
A 15 percent coupon bond selling for $900
C)
A 5 percent coupon bond selling for $1,000
D)
A 10 percent coupon bond selling for $1,000
8)
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This note was uploaded on 10/17/2009 for the course EC 370 taught by Professor Staff during the Spring '08 term at University of Oregon.
 Spring '08
 Staff

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