4.1 Multiple Choice Questions

1) When you place your funds in a savings account at a bank, those funds are

2) Debt instruments are also called

3) A debt instrument represents

4) Simple loans and discount bonds differ from coupon bonds and fixed-payment loans in that

5) Issuers of coupon bonds

6) A simple loan involves

7) The amount of funds the borrower receives from the lender with a simple loan is called the

8) The total payment to a lender for a simple loan is

9) Suppose First National Bank makes a one-year simple loan of $1,000 at 7% interest to Harry's Restaurant. At the end of one year Harry's Restaurant will pay First National

10) Suppose First National Bank makes a one-year simple loan of $1000 to Harry's Restaurant. If at the end of one year Harry's Restaurant pays First National $1400, then the interest rate on this loan must have been

11) The most common type of simple loan is a(an)

12) A discount bond resembles a simple loan in that

13) A discount bond involves

14) Which of the following is NOT a discount bond?

15) Suppose Matt's Cars issues a one-year discount bond with a face value of $10,000, and received $9259, repaying $10,000 after one year. The interest rate on this bond would be

16) Suppose Matt's Cars issues a discount bond with a face value of $10,000 payable in one year with an interest rate of 4%. How much will Acme