Exam 7: Interest Rates and Present Value

If the inflation rate is 5% and the nominal interest rate is 4%, then the real interest rate is around

Suppose your grandmother dies and leaves you $100,000 but it will be held (without interest accruing)for another two years. You are trying to figure out how much you can borrow now so that when you get the money it can be paid off with this $100,000. What concept would you use?

If you have a business opportunity that is pretty much a sure thing that will require you to borrow $1,000,000, but will return to you $200,000 a year in profit for ten years, this is

If a person is going to borrow $360,000 for a home and pay it off with a constant mortgage payment every month for 30 years, what do you know about their mortgage payment (if the interest rate is positive)?

The present value of a $1000 payment received 2 years from now at 5% annual interest will be less than $900 because of

Using the Rule of 72, how long will it take something growing at 4% per year to double

The demand for money is likely downward sloping because

The form of risk to the lender associated with a borrower not paying their debt is called

An increase in the confidence that equipment-buying firms have in their future profitability will

In a market for money

-Assuming that Figure 7.1 is a market for money that can be borrowed or saved, Box 3 is

If the inflation rate is 5% and the real interest rate is 4%, then the nominal interest rate is around

If a person is going to borrow $30,000 for a car and pay it off in monthly payments of $566.14 for 5 years the internal rate of return is

In the market for money the supply curve is made up of

If you were going to evaluate the how much money you would need to save each month if you wanted to have a specific amount of money in the future, which Excel function would help you calculate it.

If your broker tells you that a trust to which you are a beneficiary has changed and instead of getting $5000 per year starting next year you will be getting $6000 per year but it will be starting the year after next the present value to you has

If your grandmother gives you a high school graduation gift of $5,000 and you do not spend the gift, but invest it to earn an interest rate of 6% per year compounded annually, upon your graduation from college after exactly four years your gift will be worth

If people (who used to neither borrow nor save)are now borrowing to put their kids through college then this will cause the

In a supply and demand model for the market for money, we typically use the _____ to look at savers' behavior.

Interest sensitive consumption is negatively impacted by interest rates because when you