D076 Unit 3 Questions and Answers Already Passed

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D076 Unit 3 Questions and Answers Already Passed Which type of interest rate includes interest on interest in addition to interest on the principal? ✔✔Compound interest What is the rate at whi... ch the average price level of particular goods and services in an economy increases over a period of time? ✔✔Inflation rate You signed an apartment contract today. You are going to pay $1,500 at the beginning of each month for the next 12 months, starting today. What type of cash flows is this contract? ✔✔An annuity due What is the term for the return over the entire period that an investor owns a financial security? ✔✔Holding period return What is used to measure total risk? ✔✔Standard deviation What is the term for the risk that changes in interest rates will impact the value of a bond? ✔✔Interest rate risk What is another name for the cost of capital? ✔✔Discount rate What is the name for the minimum rate of return that an investor or lender will accept for investments? ✔✔Required rate of return The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real interest rate? ✔✔5% Which action reduces the future value of cash flows? ✔✔Receive all cash flows later than expected. How is risk defined in finance? ✔✔The possibility that the realized or actual return will differ from what we expect Which example below is considered a market risk factor? ✔✔An unexpected change in interest rate occurs. [Show More]

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