Question 1

An increase in the prices of goods and services causes the demand for funds to _____ and market interest rates should _______.

Accepted Answer

A)  fall; increase 
B)  fall; decrease 
C)  rise; increase 
D)  rise; decrease 
A)  fall; increase 
B)  fall; decrease 
C)  rise; increase 
D)  rise; decrease

Question 2

According to the expectations theory of term structure,if investors believed that the average of the expected future short-term yields was greater than the long-term yield for a holding period,they would act so as to:

Accepted Answer

A)  drive down the price of the short-term security and drive up the price of the long-term security. 
B)  drive up the price of the short-term security and drive down the price of the long-term security. 
C)  drive up the prices of both the short-term and long-term securities. 
D)  drive down the prices of both the short-term and long-term securities. 
A)  drive down the price of the short-term security and drive up the price of the long-term security. 
B)  drive up the price of the short-term security and drive down the price of the long-term security. 
C)  drive up the prices of both the short-term and long-term securities. 
D)  drive down the prices of both the short-term and long-term securities.

Question 3

An increase in interest rates is likely to result in a permanent,higher level of hoarding.

Accepted Answer

A) True 
 B)False

Question 4

A higher level of income in all sectors of the economy causes the demand for funds to _______ and the interest rate to _____.

Accepted Answer

A)  increase; rise 
B)  decrease; fall 
C)  increase; fall 
D)  decrease; rise 
A)  increase; rise 
B)  decrease; fall 
C)  increase; fall 
D)  decrease; rise

Question 5

When a yield curve has a positive slope:

Accepted Answer

A)  long-term yields are higher than short-term yields. 
B)  short-term yields are higher than long-term yields. 
C)  the bond market is expecting default by bond issuers. 
D)  the inflation rate is expected to fall. 
A)  long-term yields are higher than short-term yields. 
B)  short-term yields are higher than long-term yields. 
C)  the bond market is expecting default by bond issuers. 
D)  the inflation rate is expected to fall.

An increase in the prices of goods and services causes the demand for funds to _ and market interest rates should ___.

According to the expectations theory of term structure,if investors believed that the average of the expected future short-term yields was greater than the long-term yield for a holding period,they would act so as to:

An increase in interest rates is likely to result in a permanent,higher level of hoarding.

A higher level of income in all sectors of the economy causes the demand for funds to ___ and the interest rate to _.

When a yield curve has a positive slope:

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

Government Debt, monetary Policy and the Payments System

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

Exam 13: An Introduction to Interest Rate Determination and Forecasting

An increase in the prices of goods and services causes the demand for funds to _____ and market interest rates should _______.

According to the expectations theory of term structure,if investors believed that the average of the expected future short-term yields was greater than the long-term yield for a holding period,they would act so as to:

An increase in interest rates is likely to result in a permanent,higher level of hoarding.

A higher level of income in all sectors of the economy causes the demand for funds to _______ and the interest rate to _____.

When a yield curve has a positive slope:

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

Government Debt, monetary Policy and the Payments System

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

An increase in the prices of goods and services causes the demand for funds to _ and market interest rates should ___.

A higher level of income in all sectors of the economy causes the demand for funds to ___ and the interest rate to _.