Interest-rate risk results from:
A. bond prices being fixed over the life of the bond.
B. a mismatch between an individual's investment horizon and a bond's maturity.
C. inflation being uncertain.
D. the fact that most people hold bonds until they mature.
Answer: B
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Kim used to work at "The Big One" accounting firm, and she earned $50,000 a year. She saved her money and has now invested $100,000 in her own firm. Profit is $20,000 a year, which Kim receives as her only compensation. She concludes that this is great
because a 20 percent return is much better than the 8 percent she could get in another investment (the opportunity cost of the funds). What is wrong with this line of thinking?
When we speak of the Fed's responsibility to supervise member banks, we are saying that the
A) Fed's advisory board will help member banks manage their assets and liabilities. B) Fed's Open Market Committee will advise member banks regarding the purchase and sale of government securities. C) Fed's Board of Governors will advise member banks regarding the appropriate interest rates to be charged on various loans. D) Fed will advise member banks regarding the nature of loans and compliance with regulations. E) Fed will advise member banks about the proper control of each individual bank's money supply.
If the demand curve of a market is P = 14 - Q and the supply curve is P = 2 + 2Q, but a price ceiling of 6 is imposed, what will the shortage be?
What will be an ideal response?
In recent years, the industrially advanced nations as a group have provided foreign aid amounting to about what percentage of their aggregate outputs?
A. 0.25 percent. B. 0.7 percent. C. 1 percent. D. 2 percent.