1. The sensitivity of bond prices to changes in interest rates is:
credit risk.
interest rate risk.
default risk.
inflation risk.
2. Which of the following leases is classified as a financial lease?
A 5 year security system lease, in which the lessee receives ownership of the security system at the end of the 5 years.
A 1 year apartment lease. The apartment has a life expectancy of 30 years.
A 2 year hunting lease, in which the land and the hunting lodge cost $675,000 and the present value of lease payments are $50,000.
A 2 year office lease. The office has a life expectancy of 30 years.