ECON 1BB3 Lecture Notes - Lecture 13: Stock Market, Capital Gain, Autarky
ECON 1BB3 Full Course Notes
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6. If there is a shortage of loanable funds, then
a. |
the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium. |
b. |
the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium. |
c. |
the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium. |
d. |
the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium. |
7. We associate the term debt finance with
a. |
the bond market and we associate the term equity finance with the stock market. |
b. |
the stock market and we associate the term equity finance with the bond market. |
c. |
financial intermediaries and we associate the term equity finance with financial markets. |
d. |
financial markets and we associate the term equity finance with financial intermediaries. |
8. If the demand for loanable funds shifts to the right, then the equilibrium interest rate
a. |
and the quantity of loanable funds rises. |
b. |
and the quantity of loanable funds falls. |
c. |
rises and the quantity of loanable funds falls. |
d. |
falls and the quantity of loanable funds rises. |
9. Long-term bonds are
a. |
riskier than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds. |
b. |
riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds. |
c. |
less risky than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds. |
d. |
less risky than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds. |
10. Compared to bondholders, stockholders
a. |
face higher risk and have the potential for higher returns. |
b. |
face higher risk but receive a fixed payment. |
c. |
face lower risk and have the potential for higher returns. |
d. |
face lower risk but receive a fixed payment. |
11. The old adage, 'don't put all your eggs in one basket', is very similar to a modern bit of advice concerning financial matters:
a. |
Buy low-risk bonds. |
b. |
Use a medium of exchange. |
c. |
Diversify. |
d. |
Intermediate. |
12. A budget surplus is created if
a. |
the government sells more bonds than it buys back. |
b. |
the government spends more than it receives in tax revenue. |
c. |
private saving is greater than zero. |
d. |
None of the above is correct. |
interest-rate risk. currency risk. security risk. |
savings deposits pay no interest. time deposits have specified maturities. savings deposits have specified maturities. |
the interest rate on car loans and the interest rate on home mortgages. the average interest rate earned on assets and the average interest rate paid on liabilities. bid and asked prices on a bond. |
a liability to both you and First National. an asset to First National and a liability to you. an asset to you and a liability to First National. |
proprietary trading. underwriting. factoring. |
dealing with problems of moral hazard. insuring firms against loss from fire. insuring firms against loss from employee theft. |
when an investment bank researches a firm's value. how an investment bank underwrites large issues. the review of a prospectus by the SEC. |
required reserves less total reserves. total reserves plus required reserves. required reserves divided by total reserves. |
imposed capital requirements on investment banks. imposed capital requirements on both commercial and investment banks. imposed asset requirements on all banks. |
excess reserves. secondary reserves. bank capital. |