Risk-free rate of interest

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Reference no: EM13847628

1. If the risk-free rate of interest (rf) is 3.5%, then you should be indifferent between receiving $1000 in one-year or

a. $1,000.00 today.

b. $966.18 today.

c. $965.00 today.

d. $1,035 today.

2. The effective annual rate for a certificate of deposit that pays 3.9% APR compounded monthly is closest to:

a. 3.90%

b. 3.97%

c. 3.83

d. 4.04%

3. If the risk-free rate of interest (rf) is 6%, then you should be indifferent between receiving $250 in one year or

a. $235.85 today.

b. $250.00 today.

c. $265.00 today.

d. None of the above

4. Wesley Mouch's auto loan requires monthly payments and has an effective annual rate of 6.43%. The APR on this auto loan is closest to:

a. 6.50%

b. 6.00%

c. 6.25%

d. 6.62%

Reference no: EM13847628

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