A month ago, you bought a one-year bond with a value of $100 that pays a fixed interest rate of 5 percent per year. The interest rate of the economy was also 5 percent. Today you read in the newspaper that the interest rate in the economy increased to 6 percent. You are holding a bond that is:
A. not desirable at all.
B. desirable to you.
C. less desirable to other investors.
D. highly desirable to other investors.
Answer: C
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The Laffer curve shows a relationship between
A) interest rates and investment spending. B) government spending and real Gross Domestic Product (GDP). C) tax rates and tax revenues. D) the price level and real Gross Domestic Product (GDP).
Which of the following are true statements about IBFs?
A) IBFs are subject to reserve requirements. B) IBFs are allowed to receive deposits from, and make loans to, nonresidents of the U.S. or other IBFs. C) IBFs are subject to interest rate regulations. D) All of the above.
For a retailer buying from a wholesaler, volume discounts do not violate the Robinson-Patman act because
a. To sell larger volumes, the retailer himself has to offer discounts b. To sell larger volumes, the retailer has to incur costs in promoting the item c. To sell larger volumes, the retailer has to hold the items in inventory longer d. All of the above
If Matt Taylor gets his $800 loan from the Paris First National Bank in cash rather than in the form of a new checkable deposit, the:
a. Paris First National Bank will get $800 in new reserves. b. Paris First National Bank will not get $800 in new reserves. c. assets of the Paris First National Bank will increase by $800. d. assets of the Paris First National Bank will decease by $88. e. liabilities of the Paris First National Bank will increase by $800.