The preferred method of showing interest rates

True or False questions.

1. The preferred method of showing interest rates between competing instruments is the yield to maturity.

2. Interest represents the opportunity cost to the lender.

3. Money can be said to be worth sometimes more now than in the future and sometimes worth more in the future than now.

4. A zero-coupon bond pays a flat coupon rate of $100 no matter what the interest rate.

5. Because interest rates are forward looking there is no difference between nominal and real rates.

6. If the interest rate is 6%, then the future value of a two year investment of $1000 is $1012.36.

7. The proper way to price out a debt instrument with future payments is to find its present value.

8. Certain bonds are better analyzed by calculating their intermediate value rather than either their present or their future value.

9. As interest rates go up, so bond prices will go down.

10. A bond that has no maturity, but instead essentially has just an infinite amount of coupons, is known as a consol.

11. According to the Fisher equation, expected inflation partly determines the interest rate.

12. An investor that is holding onto a bond in order to sell it at a profit is hoping that interest rates will rise.

13. Early forms of interest arose from the lending of seeds and animals that could reproduce in order to pay off the interest.

14. Ancient Egyptians used farm price supports to enable farmers to pay back loans.

15. According to Brook, while most interest-based lending is ethical, payday loans are not.

16. According to Brook, it is only in recent times that moneylenders have been looked upon as scourges of society.

17. Aristotle believe that money was unproductive as it was only a medium of exchange and as such it was unnatural and unethical to charge interest on it.

18. Brook concludes by citing the objectivist ethics espoused by Ludwig von Mises.

19. The highest rate for the 30 year mortgage since 1971 was 18.45% in 1979.

20. Yamada shows past interest rate changes as a series of sharp downturns but slower and more drawn out upturns.