Key to  the Exercises 

教学课件：习题解析

II Define briefly the following terms and concepts.

1. Interest is a fee, paid on borrowed capital. The fee is compensation to the lender for foregoing other useful investments that could have been made with the loaned money.

2. The interest rate is the percentage of the principal that is paid as a fee (the interest), over a certain period of time, which is the cost and basic price of borrowed capital that equates the demand for and supply of funds in the financial markets.

3. Compounding is a method used to find out the future value of a present sum—that is, what is the future value of money lent (or borrowed) today.

4. Discounting is the method used to figure out what the present value of money is to be received (or paid) in the future.

5. The term structure of interest rates is the relationship between maturity(or time)and return at a given point of time .

6. The risk structure of interest rate is the relationship among interest rates on securities that have the same term to maturity but have different interest rates.

III Translate the following sentences into Chinese.

1. 实际利率是经过货币购买力或预期通货膨胀修正后的名义回报率。

2. 浮动利率在整个融资期间不固定，而是根据市场利率的变化不时进行调整。

3. 优惠利率是指享有优惠条件的利率，其存款利率比一般存款利率高，贷款利率则比一般贷款利率低。

4. 基准利率引导并影响其他利率水平。

5. 市场利率指在某一时点完全由金融市场上资金的供给和需求所决定的利率。

IV Translate the following sentences into English.

1. The interest rate is the return on lending toady(spending in the future) and the cost of borrowing today(repaying in the future).

2. Compounding answers this question: what is the future value of money lent today?

3. The yield curve is a graphical representation of the relationship between interest rates(yields) on a particular security and its term to maturity. 

4. Because investors are risk averse, they must be offered the bonus of extra interest to accept more risk.

5. The extra return or interest is called a risk premium, and its size increases with the riskiness of the borrower.