d076 Unit 3 EXAMS
How is risk defined in finance? - ✔✔The possibility that the realized or actual return will differ from
what we expect
The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real interest
rate? - ✔✔5%
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
What is the rate at which the average price level of particular goods and services in an economy
increases over a period of time? - ✔✔Inflation rate
What is the term for the return over the entire period that an investor owns a financial security? - ✔✔
Holding period return
What is the term for the risk that changes in interest rates will impact the value of a bond? - ✔✔
Interest rate risk
What is used to measure total risk? - ✔✔Standard deviation
Which action reduces the future value of cash flows? - ✔✔Receive all cash flows later than expected.
Which example below is considered a market risk factor? - ✔✔An unexpected change in interest rate
occurs.
How is risk defined in finance? - ✔✔The possibility that the realized or actual return will differ from
what we expect
The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real interest
rate? - ✔✔5%
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
What is the rate at which the average price level of particular goods and services in an economy
increases over a period of time? - ✔✔Inflation rate
What is the term for the return over the entire period that an investor owns a financial security? - ✔✔
Holding period return
What is the term for the risk that changes in interest rates will impact the value of a bond? - ✔✔
Interest rate risk
What is used to measure total risk? - ✔✔Standard deviation
Which action reduces the future value of cash flows? - ✔✔Receive all cash flows later than expected.
Which example below is considered a market risk factor? - ✔✔An unexpected change in interest rate
occurs.
