1. The money demand equation used by the Keynesians has as its premise that as interest...
1. The money demand equation used by the Keynesians has as its premise that as interest rates fall, money demand
A. Stays the same
B. Increases
C. Decreases
D. Flucuates
2. What is the present value of $500 to be paid in 2 years if the interest rate is 5 percent?
A. $453.51
B. $500.00
C. $476.25
D. $550.00
3. A decrease in interest rates after a bond is initially sold results in the YTM being ___ than the coupon rate and the ___ of the bond being ___ than the face value
A. Greater; present value; more
B. Less; present value; greater
C. Greater; present value; less
D. Less; present value; equal
4. If the price of bonds rises from $900 to $950, the result is a change in------ of (for)bonds
A. Demand
B. Supply
C. Quantity demanded only
D. Both quantity demanded and quantity supplied
Homework Answers
1) The money demand equation used by the Keynesian has as it's premises that as interest rate decreases , money demand increases
2) The present value of Rs.500 to be paid in 2years if the interest rate is 5percent is Rs 550
3)A decrease in interest rate after a bond is initially sold result in the YTM being less than the coupon rate and the present value being greater than the face value
4)If the price of bond rises from 900 to 950 th the result is a change in quantity demanded only
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