#1
Which of the following best describes interest rates?
The rate at which money is borrowed or lent over a specific period
The rate at which stocks are bought and sold in the market
The rate at which taxes are applied to income
The rate at which goods and services are exchanged in the economy
#2
What is the Federal Reserve's main tool for influencing interest rates in the United States?
Fiscal policy
Monetary policy
Trade policy
Industrial policy
#3
What is the term for the interest rate at which banks lend to each other overnight?
Federal funds rate
Prime rate
Discount rate
LIBOR
#4
What is the relationship between bond prices and interest rates?
They have no relationship
Bond prices and interest rates move inversely
Bond prices and interest rates move in the same direction
Bond prices are unaffected by changes in interest rates
#5
What is the term used to describe the risk that interest rates will rise and bond prices will fall?
Inflation risk
Credit risk
Reinvestment risk
Interest rate risk
#6
What is the name of the interest rate that banks charge their most creditworthy customers?
Federal funds rate
Prime rate
LIBOR
Discount rate
#7
Which of the following factors does NOT typically influence interest rates?
Inflation expectations
Unemployment rates
Central bank policies
Exchange rates
#8
What is the term used to describe the interest rate charged by the Federal Reserve when it lends money to banks?
Federal funds rate
Prime rate
Discount rate
LIBOR
#9
What does the term 'yield curve' refer to?
A graphical representation of the supply and demand for bonds
A measure of the profit margin on bond investments
The relationship between bond yields and their maturity dates
A financial instrument used to hedge against interest rate fluctuations
#10
What is the term used to describe a situation where short-term interest rates are higher than long-term rates?
Inverted yield curve
Flat yield curve
Normal yield curve
Steep yield curve
#11
What effect does an increase in interest rates typically have on the value of a country's currency?
It causes the currency to depreciate
It causes the currency to appreciate
It has no effect on the currency's value
It leads to hyperinflation
#12
What is the term used to describe the process of converting future cash flows into present value?
Discounting
Compounding
Amortizing
Reinvesting
#13
Which of the following factors is typically NOT considered in the calculation of interest rates?
Default risk
Liquidity preferences
Political stability
Market demand
#14
What is the term used to describe a sudden increase in interest rates?
Interest rate surge
Interest rate hike
Interest rate shock
Interest rate spike