Principles of Investment Answers

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1
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Which rule is important to remember when evaluating risk?

A
Long-term investments tend to be less risky.
B
There is no connection between risk and return
C
Investments believed to be unpredictable are more risky.
D
The demand tends to be higher for high-risk investments.
6

How much interest will Pablo receive from his investment?

A
$200 due to a real interest rate of 4 percent
B
$250 due to a real interest rate of 5 percent
C
$300 due to a real interest rate of 6 percent
D
$350 due to a real interest rate of 7 percent
8

Monetary policy is directly implemented by .

A
the Federal Reserve
B
legislatures
10

Which rule is important to remember when evaluating risk?

A
Long-term investments tend to be less risky.
B
There is no connection between risk and return
C
Investments believed to be unpredictable are more risky.
D
The demand tends to be higher for high-risk investments.
12

X asset✔ percentagedollar amount

Answers:
Interest rates are generally expressed as a(n) of the loan.:percentage
The length of time before a loan must be repaid is called the of the loan.:term
Loans that are considered to be high risk typically have a interest rate.:high
13

How much interest will Pablo receive from his investment?

A
$200 due to a real interest rate of 4 percent
B
$250 due to a real interest rate of 5 percent
C
$300 due to a real interest rate of 6 percent
D
$350 due to a real interest rate of 7 percent
16

intervalreturn✔ term

A
interval
B
return
C
✔ term
17

Monetary policy is directly implemented by .

A
the Federal Reserve
B
legislatures
20

lowmedium✔ high

A
low
B
medium
C
✔ high

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