Question

15

Changes in the money supply, national income, and inflationary expectations will affect ____ rates.

Select one:

a. long-term

b. short-term

c. average

d. intermediate

17

____ represent debt of the issuer.

Select one:

a. Assets

b. Bonds

c. Revenues

d. Stocks

18

When the Fed increases the money supply, the quantity of loanable funds increases relative to the demand which may result in ____ interest rates.

Select one:

a. lower

b. higher

c. no relationship with

d. no change in

19

The four major factors that determine the relationships among interest rates are

Select one:

a. default risk, liquidity risk, credit risk, and maturity risk.

b. interest rate risk, default risk, credit risk, and maturity risk.

c. expected inflation, terms to maturity, credit risk, and liquidity risk.

d. credit risk, liquidity risk, terms to maturity, and impact of taxes.

20

The yields on municipal bonds are lower than other securities with similar ratings and terms for two reasons:

Select one:

a. liquidity and maturity risk.

b. tax treatment and credit risk.

c. liquidity and credit risk.

d. tax treatment and  maturity risk.

PLEASE ANSWER ALL I WILL RATE.

THANK YOU!!

Answer 1

Long term rates. The factors that affect the entire market affects the long term rates.

So, the correct option is option A.

Bonds represent debt of the issuer.

Bonds are debt of the issuer and are paid back in the form of principal and interest payments over the life of the bond.

So, the correct option is option B.

As the money supply increases and the demand for money falls, the interest rates falls.

So, the correct option is option A.

The relationship between interest brates is determined by :

Maturity risk, credit risk, default risk and liquidity.

So the correct option is option A.

The municipal bonds have lower yield as these bonds are not taxable and is secured by the Government so the probability of default is also low, so the credit risk is lower.

So, the correct option is option B.