Question

Which bond should have the highest interest rate? A. Low quality bonds B. Medium quality bonds...

Which bond should have the highest interest rate?

A.

Low quality bonds
B.

Medium quality bonds
C.

High quality bonds

Which of the following statements is NOT true?

A.

Stock owners benefit from stock price increases
B.

Common stocks are not securities
C.

Stock prices tend to be very volatile
D.

Higher stock prices allow companies access to more capital

What is the expected impact of a decline in the money supply to the US economy?

A.

Lower aggregate prices (deflation)
B.

Higher aggregate prices (inflation)
C.

There is no general relationship between the money supply and inflaton

Which of the following is NOT a component of federal fiscal policy?

A.

Federal tax revenues
B.

Federal government expenditures
C.

Federal budget deficit
D.

All of the above are components of federal fiscal policy

A strong US dollar tends to

A.

Reduce exports to foreign buyers
B.

Reduce imports from foreign sellers

What is the maturity classification for 30-year Treasury bonds?

A.

Short term
B.

Intermediate term
C.

Long term

Where do firms invest surplus funds that are only available for a short period of time?

A.

Capital market
B.

Commodity futures market
C.

Real estate market
D.

Money market

Overnight loans issued by the Federal Reserve to commercial banks are known as

A.

Negotiable CD's
B.

Commercial paper
C.

Federal funds
D.

Repurchase agreements

Which type of security has interest payments that are generally exempt from federal income taxes?

A.

Treasury bonds
B.

Municipal bonds
C.

Mortgage-backed securities
D.

Commercial loans

What do the authors mean when they state that financial intermediaries can achieve economies of scale with respect to transaction costs?

A.

Intermediaries can spread transaction costs across larger transaction volumes, so the cost per unit is lower.
B.

Intermediaries tend to specialize in certain types of transactions, so their costs are lower because they operate at lower volume than other types of financial firms.
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Homework Answers

Answer #1

Which bond should have the highest interest rate?

C.

High quality bonds

The high quality bonds would offer the highest yield

Which of the following statements is NOT true?

B.

Common stocks are not securities

Common stocks are examples of securities.

What is the expected impact of a decline in the money supply to the US economy?

A.

Lower aggregate prices (deflation)

Lower money supply leads to higher interest rate. This reduces investment and hence demand.

Please post other questions separately.

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