Exam 4: Determining Interest Rates

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

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Loanable funds refers to

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

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

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

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

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

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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?

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

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

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

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In the bond market,the seller is considered to be

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What is a black swan event?

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The demand curve for loanable funds slopes down because

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

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

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Alternating periods of economic expansion and recession are known as the

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In an open economy,desired domestic lending

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During an economic recession

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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?

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