Exam 4: Determining Interest Rates

A one-year discount bond with a face value of $10,000 that is currently selling for $9,400 has an interest rate of

Loanable funds refers to

The demand curve for bonds would be shifted to the left by an

An increase in the price level will result in a(n)________ in the demand for money and cause the nominal interest rate to ________.

If the expected gains on stocks rise,while the expected returns on bonds do NOT change,then

During most of the time in recent decades,the domestic government sector was

Assess the impact on the bond market of the rise in Internet trading of stocks.

Suppose you are risk neutral and you are deciding between two investments.One has a guaranteed return of 2% while the second has a 60% chance of a 10% return and a 40% chance of a -5% return.Which investment would you choose? Why?

An increase in the tax rate on dividends,other things equal,is likely to result in a(n)

If expected inflation declines by 2%,what should happen to nominal interest rates according to the Fisher effect?

Suppose that Congress passes an investment tax credit.The likely result will be

In the bond market,the seller is considered to be

What is a black swan event?

The demand curve for loanable funds slopes down because

If a small open economy reduces its budget deficit,the result will be

The two most important factors that cause the money demand curve to shift are

Alternating periods of economic expansion and recession are known as the

In an open economy,desired domestic lending

During an economic recession

Suppose that you own $10,000 worth of stock in General Motors.Adding stock in which of the following companies would be least likely to reduce the risk in your portfolio?