Question

1) Two of the major components that are added as part of the M2 definition of money are: a) Retail money market mutual fund accounts; Savings accounts. b) Currency and coins; Small denomination time deposit accounts. c) Traveler's checks; Savings accounts. d) Large denomination time deposit accounts; Institutional money market mutual fund accounts. 2) Which of the following is true about the current yield and yield to maturity, in terms of how they are related to bond prices? a) The current yield will always be lower than the yield to maturity regardless of what the bond price is. b) The current yield and the yield to maturity will always be exactly the same at any price that a bond is presently selling for. c) The current yield will always be higher than the yield to maturity regardless of what the bond price is. d) The current yield will always be different than the yield to maturity, except for when the market price for a bond is at par value. 3) An increase or decrease in the quantity supplied or demanded curve; An increase or decrease in supply or demand represents represents supply/demand curve. supply/demar a) movement along a; a shift of the entire b) a change in the slope of a; a new c) a shift of the entire; movement along d) a new; a change in the slope of a

Answer 1

1. A) Retail money market fund mutual fund account and savings account.

These are the to most important components that are added , the other two are certificates of deposits and time deposits.

2. D) Current yield and yield to maturity are equal only at par value, at discount, the current yield is less than YTM and at premium current yield exceeds YTM.

3. A)

A change in quantity demanded/ supplied causes change in price which causes movements along the curve, however, change in demand/supply causes shift in the curve.