Exam 1 - ab-xo I Multiple Choice Questions 5 points each 4...

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[-xo* \ I. Multiple Choice Questions ( 5 points each) ab 4' The current inflation rate is 5%o, the nominal rate necessary for you to earn an gyo real sest to: J,l1famentally, Federar Reserve determines the interest rates. II' Federal Reserve has very significant influence on over very short term federal fund rate. III' The interest rates bank offers on loan depends on time horizon of the loan. a. I only b. II onlv ^6) rr *a ut V ett of above
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6. Which of the foilowing statements is/are true? I. The plot of the relationship between investment risk and the interest rate is called the yield curve. II. Recessions in the United States usually are preceded with an inverted yield curve. III. Real interest rate represents the increase in purchasing power that will result from investing a. I only b. II only c.' II and III t''d.' All of above 7. You have two mutually exclusive projects A and B. The NPV of A is $ 12M and that of B is $ 14M, the IRR of A is 20%o u,trlle that of B is 1 8%. The correct investment decision and the best rational for that decision is to? .-al.
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This note was uploaded on 09/08/2010 for the course BUS 173A at San Jose State.

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Exam 1 - ab-xo I Multiple Choice Questions 5 points each 4...

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