ch04 - Financial Markets and Institutions, 6e...

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Unformatted text preview: Financial Markets and Institutions, 6e (Mishkin/Eakins) Chapter 4 1 Why Do Interest Rates Change? 4.1 Mul tiple Cho ice 1) As the price of a bond _________ and the expected return _________, bonds become more attractive to investors and the quantity demanded rises. A) falls; rises B) falls; falls C) rises; rises D) rises; falls Answer: A Question Status: Previous Edition 2) The supply curve for bonds has the usual upward slope, indicating that as the price _________, ceteris paribus, the _________ increases. A) falls; supply B) falls; quantity supplied C) rises; supply D) rises; quantity supplied Answer: D Question Status: Previous Edition 3) When the price of a bond is above the equilibrium price, there is excess _________ in the bond market and the price will _________. A) demand; rise B) demand; fall C) supply; fall D) supply; rise Answer: C Question Status: Previous Edition 4) When the price of a bond is below the equilibrium price, there is excess _________ in the bond market and the price will _________. A) demand; rise B) demand; fall C) supply; fall D) supply; rise Answer: A Question Status: Previous Edition 5) When the price of a bond is _________ the equilibrium price, there is an excess supply of bonds and the price will _________. A) above; rise B) above; fall C) below; fall D) below; rise Answer: B Question Status: Previous Edition 6) When the price of a bond is _________ the equilibrium price, there is an excess demand for bonds and the price will _________. A) above; rise B) above; fall C) below; fall D) below; rise Answer: D Question Status: Previous Edition 7) 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 _________. A) demand; rise B) demand; fall C) supply; fall D) supply; rise Answer: B Question Status: Previous Edition 8) When the interest rate on a bond is below the equilibrium interest rate, there is excess _________ in the bond market and the interest rate will _________. A) demand; rise B) demand; fall C) supply; fall D) supply; rise Answer: D Question Status: Previous Edition 9) When the interest rate on a bond is _________ the equilibrium interest rate, there is excess _________ in the bond market and the interest rate will _________. A) above; demand; fall B) above; demand; rise C) below; supply; fall D) above; supply; rise Answer: A Question Status: Previous Edition 10) When the...
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ch04 - Financial Markets and Institutions, 6e...

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