Question

14. ________ is the relative ease and speed with which an asset can be converted into a medium of exchange. a. Efficiency b. Deflation c. Specialization d. Liquidity

15. A ______ is bought at a price below its face value, & the _______ value is repaid at the maturity date. a. discount bond; discount b. coupon bond; discount c. coupon bond; face d. discount bond; face

16. The yield to maturity for a discount bond is ________ related to the current bond price. a. not b. positively c. directly d. negatively

17. There is ________ for any bond whose time to maturity matches the holding period a. no interest−rate risk b. yield−to−maturity risk c. a large interest−rate risk d. rate−of−return risk

18. If you expect the inflation rate to be 15 percent next year and a one−year bond has a yield to maturity of 7 percent, then the real interest rate on this bond is a. 7 percent. b. 22 percent. c. −15 percent. d. −8 percent.

19. In the bond market, the bond demanders are the ________ and the bond suppliers are the ________. a. borrowers; lenders b. lenders; borrowers c. lenders; advancers d. borrowers; advancers

20. The interest rate falls when either the demand for bonds ________ or the supply of bonds ________. a. increases; decreases b. decreases; decreases c. increases; increases d. decreases; increases

Answer 1

Answer 14:- Liquidity

Answer 15:-   discount bond; face

Answer 16:- negatively

Answer 17:- no interest-rate risk

Answer 18:- −8 percent.

Answer 19:- lenders; borrowers​​​​​​​

Answer 20:- decreases; increases.

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