You are trying to compare the present values of two separate streams of cash flows which have equivalent risks

The Fisher Effect primarily emphasizes the effects of _____ on an investor's rate of return.    A.  default B.  market C.  interest rate D.  inflation E.  maturity Refer to section 7.6

77.

You are trying to compare the present values of two separate streams of cash flows which have equivalent risks. One stream is expressed in nominal values and the other stream is expressed in real values. You decide to discount the nominal cash flows using a nominal annual rate of 8 percent. What rate should you use to discount the real cash flows?    A.  8 percent B.  EAR of 8 percent compounded monthly C.  comparable risk-free rate D.  comparable real rate E.  You cannot compare the present values of these two streams of cash flows. Refer to section 7.6

78.

Which of the following statements is correct concerning the term structure of interest rates? I. Expectations of lower inflation rates in the future tend to lower the slope of the term structure of interest rates. II. The term structure of interest rates includes both an inflation premium and an interest rate risk premium. III. The real rate of return has minimal, if any, affect on the slope of the term structure of interest rates. IV. The term structure of interest rates and the time to maturity are always directly related.    A.  I and II only B.  II and IV only C.  I, II, and III only D.  II, III, and IV only E.  I, II, and IV only Refer to section 7.7