Which of the following will lead to a decrease in the price of existing bonds?
A. a reduction in the money supply
B. a decrease in planned investment spending
C. a decrease in the rate of interest
D. an inward shift in money demand
Answer: A
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Everything else remaining unchanged, what is likely to happen to the credit supply curve of households if:
a. there is a decrease in the real interest rate? b. households expect a recession in near future? What will be an ideal response?
A bond is
A) a legal claim to a part of a corporation's future profits that includes voting rights. B) a legal claim to a part of a corporation's future profits that does not include voting rights. C) a legal claim against a firm, providing a fixed annual coupon payment and a lump-sum payment at maturity. D) a nonlegal promise to provide an annual payment to the holder when the corporation makes profits.
An closest example of a risk-free security is
a. General Motors bonds b. AT&T commercial paper c. U.S. Government Treasury bills d. San Francisco municipal bonds e. an I.O.U. that your cousin promises to pay you $100 in 3 months
The inflation rate for 2007 is computed by dividing (the CPI in 2007 minus the CPI in 2006) by the CPI in 2006, then multiplying by 100
a. True b. False Indicate whether the statement is true or false