Municipal bonds pay a relatively
a. low rate of interest because of their high default risk and because the interest they pay is subject to federal income tax.
b. low rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.
c. high rate of interest because of their high default risk and because federal taxes must be paid on the interest they pay.
d. high rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.
b
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A movement up along a supply curve indicates:
a. a rise in supply. b. an increase in the quantity supplied. c. an increase in the sales tax on a good. d. a reaction by suppliers to a decrease in demand.
Under which of the following monopoly pricing methods is the average price paid by a consumer equal to the marginal willingness to pay by that consumer:
A. First degree price discrimination B. Second degree price discrimination C. Third degree price discrimination D. Both (a) and (b) E. Both (b) and (c) F. Both (a) and (c) G. All of the above H. None of the above
If the cross-price demand curve for capital (relative to the wage) is vertical, the short run response by a firm to an increase in the wage is the same as its long run response.
Answer the following statement true (T) or false (F)
Suppose that a bank has $500 million in asset X, $400 million in asset Y, and $200 million in asset Z. Each asset has a different risk weight. The risk weight for asset X is 40%, the risk weight for asset Y is 70%, and asset Z has zero risk. The amount of risk-weighted assets for this bank is ____________ million. Assuming that the bank has to hold capital equal to 8% of its risk-weighted assets,
the bank must hold _____________ million in capital. A) $480; $38.4 B) $1,100; $88 C) $1,100; $880 D) $340; $27.2