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One-year Treasury bill rates over the next five years are expected to be 5%, 6%, 7%, 8%,and 9%. The risk premium on five-year Treasury bond is 0.5%. What is the interest rate on five-year Treasury bond?
A. 6.5%
B. 7.0%
C. 7.5%
D. 8.0%
Which of the following statements is true?
A. Short-term interest rates are not influenced by market operations of the central bank.
B. Long-term intertest rates are always higher than short-term interest rates.
C. Long-term interest rates are influenced by future inflation risks.
D. Long term interest rates are influenced by market expectations of future short-term interest rates.
E. Both A and B above.
F. Both C and D above.
The price of bonds issued by Nissan Motor Company is likely to fall when
A. The price of Japanese government bonds has fallen.
B. The Japanese government has raised the rate of consumption tax on cars.
C. Global demand for cars has expaneded.
D. The Bank of Japan has announced that it would cut policy interest rates.
E. Both A and B above.
F. Both C and D above.
Which of the following tools are used to manage banks' credit risks?
A. Offering cashless payment services
B. Making loans with lower interest rates than competitors.
C. Taking a borrower's property as collateral.
D. Finding someone who guarantees a debt.
E. Both A and B above.
F. Both C and D above.
G. All of the above.
What are the characteristics of bitcoin?
A. It is widely accepted as a means of payments
B. Its value is backed by the central bank.
C. It runs on a central server that is administered by a group of financial institutions.
D. The total number of bitcoins is pre-fixed.
E. Both A and B above.
F. Both C and D above.
Why does the Japanese financial regulator set maximum interest rates on lending to individuals?
A. To protect borrowers from being exploited by financial institutions.
B. To stimulate competition between financial institutions.
C. To avoid failures of financial institutions.
D. To improve the profitability of financial institutions.
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