The cost of money
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
|
|
||||
---|---|---|---|---|---|
default risk premium(DRP) | the difference between the interest rate on a U.S treasury bond and a corporate bond of equal maturity and marketability
🗑
|
||||
expectations theory | the theory that the shape of the yield curve depends on investors expectations about future inflation rates
🗑
|
||||
inflation | the tendency of prices to increase over time
🗑
|
||||
inflation premium(IP) | A premium for expected inflation that investors add to the real risk-free rate of return
🗑
|
||||
interest rate risk | the risk of capital losses to which investors are exposed because of changing interst rates
🗑
|
||||
inverted(abnormal) yield curve | a nownward sloping yield curve
🗑
|
||||
liquidity preference theory | the theory that, all else being equal, lenders prefer to make short term loans rather than long term loans; hence they will lend short term funds at lower rates than they lend long term funds.
🗑
|
||||
liquidity premium(LP) | a premium added to the rate on a security if the security connat be converted to cash on short notice at a price that is close to the original cost.
🗑
|
||||
market segmentation theory | The theory that every borrower and lender has a preferred maturity and that the slopeof the yield curve depends on the supply of and the demand for loanable funds in the long-term market relative to the short term market.
🗑
|
||||
Maturity risk Premium(MRP) | A premium that reflects the interest rate risk; Bonds with longher maturities have greater interest rate risk
🗑
|
||||
nominal risk-free rate, Krf | The rate of interest on a security that is free of all risk; it is approximated by the T-Bill rate or the T-bond rate and includes an inflation premium
🗑
|
||||
Normal yield curve | An upward sloping yield curve.
🗑
|
||||
Production opportunities | The returns available within an economy from investments in productive(cash generating) activities.
🗑
|
||||
Real risk-free rate of interest, k* | The rate of interest that would exist on a default-free U>S> Treasury securities if no inflation were expected.
🗑
|
||||
Reinvestment rate risk | The risk that a decline in interest rates wil lead to lower when bonds mature and funds are reinvested.
🗑
|
||||
Risk | In a financial market context, the change that a financial asset will not earn the return promised.
🗑
|
||||
Term structure of interest rates | The relationship between yields and the maturities of securities.
🗑
|
||||
Time preferences for consumption | The preferences of consumers for current consumption as opposed to saving for future consumption.
🗑
|
||||
Yield curve | A graph showing the relationship between yields and maturities of securities.
🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Created by:
$amoney
Popular Accounting sets