Reference no: EM132024227

1-The loan interest rates that a bank advertise for its loans are not necessarily the rates it actually charges. What factors might affect the interest rate charged to a particular loan customer?

a. borrower’s assets

b. borrower’s payment history on credit card accounts

c. borrower’s income

d. all of these

e. borrower’s credit history

2-Sponsors of pension plans providing benefits that are indexed to inflation often purchase Treasury inflation-Protected Securities (TIPS) as a hedge against inflation, thus transferring the inflation risk to the federal government. Why is the federal government well-positioned to assume the risk of inflation?

a. the federal government can commit to making interest payments that decrease with inflation

b. All of these

c. the federal government can commit to making interest payments that increase with inflation

d. the federal government’s can reduce the inflation rates

e. the federal government’s income tends to decrease with inflation

3-Two bonds issued by the same corporation have the same term.   One bond has higher coupon rate than the other. Which bond will typically have the higher yield?

a. the bond with the higher coupons have the same yield rate as the bond with lower coupon

b. None of these

c. the bond with the higher coupons have the higher yield

d. the bond with the lower coupons have the higher yield

e. the bond with the lower coupons have the lower yield