For a given return on assets, the lower is bank capital
A) the lower is the return for the owners of the bank.
B) the higher is the return for the owners of the bank.
C) the lower is the credit risk for the owners of the bank.
D) the lower the possibility of bank failure.
B
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The dollar amount of the yearly coupon payment expressed as a percentage of the face value of the bond is called the bond's
A) coupon rate. B) maturity rate. C) face value rate. D) payment rate.
Which of the following is NOT a reason why natural GDP might fall as a result of a supply shock?
A) The production function shifts downward. B) There might be a voluntary decline in the supply of labor in response to the decline in real wages. C) The supply of labor is a function of the expected wage rate. D) none of the above
Which of the following is true? a. The quantity of money demanded varies inversely with the nominal rate of interest
b. Money market equilibrium occurs at that nominal interest rate where the quantity of money demanded equals the quantity of money supplied. c. Rising national income will shift the demand for money to the right, leading to a new higher equilibrium nominal interest rate. d. All of the above are true.
If the nominal interest rate is 8 percent and expected inflation is 2.5 percent, then what is the real interest rate?
a. 10.5 percent b. 20 percent c. 5.5 percent d. 3.2 percent