You plan to buy a house in your local city in 15 years, and you plan to pay the full price once…

You plan to buy a house in your local city in 15 years, and you plan to pay the full price

once off. Since you don’t have enough financial resources to make the entire payment at

the beginning, you plan to put into your two nominally equal amounts in your

saving account, one immediately and the second input in 5 years. Suppose the full payment of

the house is 100,000 euro, the saving interest rate is 3%, no tax, no inflation. What

amount will you plan to put into your saving account in 5 years time?

A)34,460 euros

B)38,390 euros

C)33,580 euros

D)4,586 euros

According to the interest rate theory, prices of US government bonds with 5 years

maturity ____ prices of otherwise identical government bonds with 10 years maturity.

While the yields on AAA grade bonds are ____ than yields on BAA grade bonds

A)Are below, lower

B)Exceed, higher

C)Are below, higher

D)Exceed, lower

Suppose you need to choose to invest in either corporate bonds or in stocks. If the government decides to decrease the tax on capital gains from stocks, holding everything else constant, then the quantity of demanded bonds _____ and the ____of bonds increases.

Fill in the missing words:

A)increases, yield to maturity

B)decreases, yield to maturity

C)increases, price

D)decreases, price

4. Equities are often a bigger component of a company’s balance sheet than bonds because

A)in case of a bankruptcy, stockholders are paid first

B)It is not true that equities are a bigger component of a company’s balance sheet than bonds.

C)stockholders have the right to receive regular payments and do not have any claims on a company’s assets

D)bondholders have the right to receive dividend payments

Which of the following statements is true about a bank’s balance sheet?

A) assets and liabilities usually are the same in terms of maturity and liquidity

B) assets have a shorter maturity and are less liquid

C) assets have a longer maturity and are less liquid, while liabilities have a shorter maturity, are more liquid

D) assets usually have a longer maturity and are more liquid while liabilities have no maturity