25) _____ A) C) D) 3%. ) 2.1%. 0.4%. -0.5%. 26) A corporation acquires new funds only when its securities are sold in the 26) _____ secondary market by a stock exchange broker. secondary market by an investment bank. secondary market by a commercial bank. primary market by an investment bank. 27) Which of the following can be described as involving direct finance? 27) _____ A pension fund manager buys a short-term corporate security in the secondary market. A corporation issues new shares of stock. An insurance company buys shares of common stock in the over-the-counter markets. People buy shares in a mutual fund. 28) Other things being equal, a decrease in the default risk of corporate bonds shifts the demand curve for corporate bonds to the ________ and the demand curve for Treasury bonds to the ________.
28) _____ left; right right; right right; left left; left 29) If a security pays $110 next year, what is its yield to maturity if it sells for $100? 29) _____ A) B) C) D) 9 percent 10 percent 11 percent 12 percent 30) Reducing risk through the purchase of assets whose returns do not always move together is 30) _____ discounting. diversification. intermediation. intervention.
31) According to the quantity theory of money, if the long-run economic growth rate is 3%, by how much should the Fed increase the money supply if it wants inflation to be 2%? 31) _____ 1.25% 0.5% 5% 4.5% 32) If prices in the bond market become more volatile, everything else held constant, the demand curve for bonds shifts ________ and interest rates ________. 32) _____ left; rise right; rise left; fall right; fall 33) Which of the following is not included in the measure of M1? 33) _____ A) B) C) Demand deposits. NOW accounts. Savings deposits.
D) Currency. 34) If the nominal rate of interest is 2 percent, and the expected inflation rate is -10 percent, the real rate of interest is
- Spring '13
- Interest Rates, percent coupon bond