Money and Banking_Quiz 3 26_jul

Money and Banking_Quiz 3 26_jul - rates 3 What is important...

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Money and Banking Summer 2010 Economics 220:301 Section H6 July 12 th - August 18 th Monday & Wednesday 6pm - 9:40pm 202 Scott Hall, College Ave Instructor: Georgia Bush STUDENT NAME: Quiz 3, July 26 th . Ch 6 1) What is the yield curve? Draw a diagram of what has historically been the most common shape of the yield curve. 2) List 2 reasons why bonds of the same maturity would have different interest
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Unformatted text preview: rates. 3) What is important about Municipal bonds? 4) If it is assumed that bonds of different maturities are not substitutes, what theoretically determines the interest rate on a long-term bond? 5) What theory assumes investors consider bonds with different maturities to be perfect substitutes? According to this theory, what determines the interest rate on a long-term bond?...
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