Chapter_29 - YourResultsfor:"SelfStudyQuiz"...

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Your Results for: "Self-Study Quiz" Print this page Site Title: Principles of Economics, Eighth Edition Book Title: Principles of Economics, 8/e Book Author: Case/Fair Location on  Site: Chapter 29 > Self-Study Quiz Date/Time  Submitted: February 9, 2012 at 5:11 AM  (UTC/GMT) Summary of Results 35% Correct  of 40 Scored items: 14 Correct:  35% 26 Incorrect:  65% 3 questions not scored. 40 scored questions. More information about scoring 1. Fill in the blanks. Firms borrow  funds by issuing ____________,  and pay interest to firms and  households that ____________ their  debt. Your Answer:   Correct. Firms and the government borrow funds by issuing bonds, and they pay interest  to the firms and households (the lenders) that purchase those bonds. 2. If a $1,000 bond pays $100 per year,  the interest rate on the bond is  calculated as follows:  Your Answer: $1,000 * $100 = $10,0000 Correct Answer: $100 / $1,000 = 10%   Incorrect. The interest rate equals the amount of interest received per year divided by the  amount of the loan.
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3. Bonds are sometimes called  fixed  income  securities because: Your Answer: Bond prices don’t change when in Correct Answer: The coupon on a bond does not c interest rate.   Incorrect. The coupon on a bond does not change with fluctuations in the interest rate.  Instead of the coupon’s responding to a change in the interest rate, it is the price of the  bond that changes. 4. The relationship between bond  prices and interest rates is as  follows: Your Answer: When interest rates rise, bond pri a gain. Correct Answer: When interest rates rise, bond pri loss.   Incorrect. When the interest rate on the bank account goes up, you need to put less  money in your bank account than before to earn the same return offered by bonds. The  bond would thus be worth less and its price would fall. 5. In which of the following instances  does a firm add to its debt? Your Answer:   Correct. When a firm issues new shares of stock, it does not add to its debt. Instead, it  brings in additional owners of the firm, owners who agree to supply it with funds. Such  owners are treated differently than bondholders, who are owed the amount that they have  loaned.
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6. The difference between a  capital  gain  and a  realized capital gain  is  that: Your Answer: Taxes have been taken out of rea capital gains. Correct Answer: Realized capital gains occur when   Incorrect. Realized capital gains (or losses) are increases (or decreases) in the value of  assets, including stocks, that households receive when they actually sell those assets. 7.
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Chapter_29 - YourResultsfor:"SelfStudyQuiz"...

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