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4 Written questions

4 Multiple choice questions

  1. the amount of money today that would be needed using prevailing interesting rates to produce a given future amount of money (1+r)^n = 100
  2. the amount of money in the future that an amount of money today will yield, given prevailing interest rates x/(1-r)^n
  3. the accumulation of a sum of money in, say, a bank account, where the interest earned remains in the account to earn additional interest in the future
  4. the path of a variable whose changes are impossible to predict

4 True/False questions

  1. firm-specific riskthe reduction risk achieved by replacing a single risk with a large number of smaller, unrelated risks


  2. financethe field that studies how people make decisions regarding the allocation of resources over time and the handling of risk


  3. informational efficiencythe description of asset prices that rationally reflect all available information


  4. market riskrisk that affects all companies in the stock market


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