An important advantage of bonds as a financial asset

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Exploring Economics
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Chapter 21 / Exercise 1
Exploring Economics
Sexton
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17. An important advantage of bonds as a financial asset is that they:are standardized and therefore are easier to sell than loans.offer higher rates of return than stocks.allow the owner to receive a share of the company's profits in the form of dividends.are guaranteed to be risk free.
18. One reason financial institutions become very large is to:
19. The accompanying graph shows the market for loanable funds. Using copy tools, illustrate how the market would beaffected by an increase in the government's budget deficit. Label the new curve(s) appropriately. Then use the double dline tool to plot the new equilibrium (label it E2).
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Exploring Economics
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Chapter 21 / Exercise 1
Exploring Economics
Sexton
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10/23/2017Graded Homework - Chapter 254/4Couldn't load plugin.20. The government of Investland wants to provide incentives to private investment. The government plans to provide aninvestment tax credit to private businesses that will spend at least $10 million dollars to build new factories or buy newmachines over the next two years. The plan is expected to increase private investment by $50 billion dollars over the netwo years. Assume that the government makes appropriate changes in its spending programs so that the budget deficitremains unchanged.The current demand (D) and supply (S) curves for loanable funds in Investland are provided in the graph below. Thecurrent equilibrium interest rate and the quantity of loanable funds are 13.33% and 333.3 billion dollars respectively. Thequilibrium point is designated as point E.Using the copy tool, draw a new demand and/or supply curve for loanable funds to demonstrate the effect of such a taxpolicy. Label the new curves as D2 and/or S2. Use a double drop-line to illustrate the new equilibrium interest rate andequilibrium quantity of loanable funds for Investland and label it E2.

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