The Fisher Effect Primarily Emphasizes the Effects of _____ on an Investor's

question 68

Multiple Choice

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

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Definitions:

Face Value

The nominal or dollar value printed on a financial instrument such as a bond or stock certificate, representing the value the issuer promises to pay at maturity.

Investment Yield

The earnings generated and realized on an investment over a particular period of time, expressed as a percentage of the investment's cost.

Maturity Date

The final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.

Compound Annual

The rate of return that would be required for an investment to grow from its beginning balance to its ending one, assuming the profits were reinvested at the end of each period of the investment's lifespan.