Unformatted text preview: e bondholder a fixed amount every period and the face value at maturity. 9) A consol paying $20 annually when the interest rate is 5 percent has a price of 9) _______ A) $400. B) $100. C) $800. D) $200. 10) Everything else held constant, an increase in expected inflation, lowers the expected return on 10) ______ ________ compared to ________ assets. A) bonds; financial B) physical; real C) physical; financial D) bonds; real 11) When the government has a surplus, as occurred in the late 1990s, the ________ curve of bonds shifts to the ________, everything else held constant. A) demand; right B) supply; left C) demand; left D) supply; right 11) ______ 12) In the figure above, the price of bonds would fall from P1 to P2 if: 12) ______ A) the riskiness of bonds falls relative to other assets. B) interest rates are expected to fall in the future. C) inflation is expected to increase in the future. D) the expected return on bonds relative to other assets is expected to increase in the future. 13) Everything else held constant, an increase in the liquidity of bonds results in a ________ in 13) ______ demand for bonds and the demand curve shifts to the ________. A) fall; right B) ris...
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This document was uploaded on 03/20/2014 for the course ECO ECO349 at University of Toronto.
- Winter '14