As the inflation rate increases, Blank______. Multiple choice question. the risk-free rate decreases the required rate of return decreases the risk-free rate increases the discount rate increases

When the real rate of interest is less than the nominal rate of interest, then: Multiple Choice inflation must be added to the nominal rate. investment returns do not increase purchasing power. nominal flows should be discounted with real rates. inflation is expected to occur.

TRUE / FALSE The discount rate used to discount the value of future dollars can generally be referred to as the investor’s required rate of return.

dont use chatgpt answer The present value of a future amount: a. will always be less than the future amount b. can be calculated precisely if the discount rate and number of periods is known c. is worth less than the future value d. both a. and b. above are true

The _______ models the relationship between inflation rate, nominal return, and real return. Multiple Choice   Interest Rate Parity.   Put-Call Parity.   Fisher Effect.   Law of One Price.   Purchasing Power Parity.

The future value of a single sum   A. is generally larger than the present sum.   B. decreases as the number of periods increases.   C. does not depend upon the number of periods.   D. decreases as the interest rate increases.

The present value of a lump sum future amount: O A. increases as the interest rate decreases. OB. decreases as the time period decreases. OC. is inversely related to the future value. O D. is directly related to the interest rate.

Which of the following statements is/are false, all else the same? 1. Present values increase as the discount rate increases. II. Present values increase the further away in time the future value. III. Present values are always smaller than future values when both rand t are positive.

Which of the following is true about Interest Rate? i. The Fisher Effect illustrates the positive relationship between inflation and nominal interest rates. ii. APR will always be greater than the EAR. iii. We can find the nominal interest rate by adding the default and maturity premiums to the sum of the real rate and inflation. O A. ii and i only O B. i and ii only OC. i only O D. i, ii, and iii

The market risk premium is computed by: subtracting the risk-free rate of return from the market rate of return. adding the risk-free rate of return to the market rate of return. subtracting the risk-free rate of return from the inflation rate. adding the risk-free rate of return to the inflation rate. multiplying the risk-free rate of return by a beta of 1.0.