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1) Which of the following bonds would you expect to pay the highest interest rate? a) a bond issued by the federal government b) a bond issued by Bombardier c) a bond issued by Manitoba d) a bond issued by a new restaurant chain 2) What do people who buy newly issued stock in a corporation such as Rockwood Pottery Ltd
1) Which of the following bonds would you expect to pay the highest interest rate?
a)
a bond issued by the federal government
b)
a bond issued by Bombardier
c)
a bond issued by Manitoba
d)
a bond issued by a new restaurant chain
2)
What do people who buy newly issued stock in a corporation such as Rockwood Pottery Ltd. provide?
a)
They provide debt finance and so become part owners of Rockwood.
b)
They provide debt finance and so become creditors of Rockwood.
c)
They provide equity finance and so become part owners of Rockwood.
d)
They provide equity finance and so become creditors of Rockwood.
3) Which of the following best defines financial intermediaries?
a)
They are the same as financial markets.
b)
They are individuals who make a profit by buying a stock low and selling it high.
c)
They are a more general name for financial assets, such as stocks, bonds, and chequing accounts.
d)
They are financial institutions through which savers can indirectly provide funds to borrowers.
4) Which of the following is the primary advantage of mutual funds?
a)
They usually make a return that "beats the market."
b)
They allow people with small amounts of money to diversify.
c)
They provide customers with a medium of exchange.
d)
They allow investing in venture companies.
5) In a closed economy, what does (T - G) represent?
a)
national saving
b)
investment
c)
private saving
d)
public saving
6) Which of the following would a macroeconomist consider as investment?
a)
Ernest purchases a bond issued by Tim Hortons.
b)
Jerry purchases stock issued by BCE.
c)
Alice builds a new restaurant.
d)
Brenda buys an amount of gold.
7) What does a higher interest rate induce households to do?
a) save more, so the supply of loanable funds slopes upward
b) save less, so the supply of loanable funds slopes downward
c) invest more, so the supply of loanable funds slopes upward
d) invest less, so the supply of loanable funds slopes downward
Expert Solution
Answer:
1.
d)
a bond issued by a new restaurant chain
A bond issued by a new restaurant chain is expected to pay the highest interest rates. The reason being the higher risk and the required funds the chain.
2.
c)
They provide equity finance and so become part owners of Rockwood.
3.
c)
They are a more general name for financial assets, such as stocks, bonds, and chequing accounts.
4.
b)
They allow people with small amounts of money to diversify.
5.
d)
public savings
6.
All the above are types of investment.
7.
a)
save more, so the supply of loanable funds slopes upward
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