1. The ease with which a financial claim can be resold is its quality. b. risk d

Question

1. The ease with which a financial claim can be resold is its quality. b. risk d. perpetuity. If the budget deficit 2. The federal government demand for loanable funds is were to increase, the federal govermment demand for loanable finds wol a Interest elastic decrease h. Interest clastic, increase c Interest inelastic, increase à Interest inelastic, decrease 3. Which Fed action does not directly increase total reserves in te buaking a Lowering the Discount Rate Buying U.S. Government securities oa the open market d None of the above 4. Ifepected inflation in a period exceeds actual inflation borrowers will benefit savers will lose purchasing power SSUs will benefit at the expense of DSUs d interest rates are likely to increase in the fi 5. Therefoure, its current yield must be Abond's coupon ratecalls for a 10% coupon interest. The curent price of the honá is $1000. , h. 30percent 40percent d 80percent e aone of the above S. The Fisher effect is a theory which holds that nominal rates include the real rate of interest plus past unul in fatin rates. b. nominal rates include the real rate of interest plus expected anual inflation rates c real rates are always positive. d inflation has no impact upon interest rates.

Explanation / Answer

1.
Option c. marketability
2.
Option c.interest inealstic, increase
3.
Option a.Lowering the Discount Rate
4.
Option a.borrowers will benefit
5.
Option b.=10%*1000/1000=10%
6.
Option b. nominal rates include the real rate of interest plus expected annual inflation rates

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