Assume you are holding Treasury securities and have sold futures to hedge against interest-rate risk. If interest rates rise
A) the increase in the value of the securities equals the decrease in the value of the futures contracts.
B) the decrease in the value of the securities equals the increase in the value of the futures contracts.
C) both the securities and the futures contracts decrease in value.
D) both the securities and the futures contracts increase in value.
B
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A tax is efficient if
A) it is based on profits earned and not on wages. B) it imposes a small excess burden relative to the revenue it raises. C) it encourages saving and investment. D) individuals with the lowest incomes pay proportionately lower taxes than individuals with the highest incomes.
________ analysis by economists refers to the attempt to answer questions such as what are the effects of a tax on production and consumption decisions
A) Positive B) Negative C) Normative D) Investigative
Suppose the Fed announces an increase in the proportion of deposits that a bank is legally required to hold in reserve or on deposit with the Fed. This will: a. reduce the money supply in the economy
b. increase the amount of excess reserves of commercial banks. c. decrease the reserve requirements of commercial banks. d. result in an increase in the money supply in an economy.
Missy recently rearranged her portfolio so that it has a higher average return. As a result of this rearranging, Missy
a. raised both firm-specific risk and market risk. b. raised firm-specific risk, but not market risk. c. raised market risk, but not firm-specific risk. d. None of the above is correct.