Chapter_4_Practice_prac_3[1]

Chapter_4_Practice_prac_3[1] - D expected return relative...

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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) When the price of a bond is above the equilibrium price, there is excess _________ in the bond market and the price will _________. 1) _______ A) demand; rise B) supply; fall C) demand; fall D) supply; rise 2) When the interest rate on a bond is above the equilibrium interest rate, there is excess _________ in the bond market and the interest rate will _________. 2) _______ A) demand; fall B) supply; rise C) supply; fall D) demand; rise 3) The demand for an asset rises if _________ falls. 3) _______ A) liquidity relative to other assets B) wealth C) risk relative to other assets
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Unformatted text preview: D) expected return relative to other assets 4) During business cycle expansions when income and wealth are rising, the demand for bonds _________ and the demand curve shifts to the _________. 4) _______ A) falls; left B) falls; right C) rises; left D) rises; right 5) An increase in the expected rate of inflation will _________ the expected return on bonds relative to that on _________ assets, and shift the _________ curve to the left. 5) _______ A) reduce; real; demand B) reduce; financial; demand C) raise; financial; supply D) raise; real; supply 6) When the federal government's budget deficit increases, the _________ curve for bonds shifts to the _________. 6) _______ A) supply; right B) demand; right C) supply; left D) demand; left 1) B 2) A 3) C 4) D 5) A 6) A...
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This note was uploaded on 09/07/2011 for the course FIN 353 taught by Professor Cobus during the Spring '08 term at S.F. State.

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Chapter_4_Practice_prac_3[1] - D expected return relative...

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