Ch01 - The Investment Setting 1. Investors are willing to forgo current consumption in order to increase future consumption for a nominal rate of interest. a. True b. False 2. The rate of exchange between certain future dollars and certain current dollars is known as the pure rate of interest. a. True b. False 3. An investment is the current commitment of dollars over time to derive future payments to compensate the investor for the time funds are committed, the expected rate of inflation, and the uncertainty of future payments. a. True b. False 4. The holding period return (HPR) is equal to the holding period yield (HPY) stated as a percentage. a. True b. False 5. The geometric mean of a series of returns is always larger than the arithmetic mean, and the difference increases with the volatility of the series. a. True b. False 6. The expected return is the arithmetic average of all possible returns. a. True b. False 7. An individual who selects the investment that offers greater certainty when everything else is the same is known as a risk-averse investor. a. True b. False 8. Two measures of the risk premium are the standard deviation and the variance. a. True b. False 9. The variance