Practice Ch 5
Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) If wealth decreases, the demand for stocks _____ and that of long-term bonds _____.
A) decreases; decreases B) increases; decreases
C) increases; increases D) decreases; increases
1)
2) If the expected return on ABC stock is unchanged and the expected return on CBS stock falls from
10 to 5 percent, then the expected return of holding CBS stock _____ relative to ABC stock and the demand for ABC stock _____.
A) rises; rises B) rises; falls C) falls; rises D) falls; falls
2)
3) If housing prices are suddenly expected to shoot up, then, other things equal, the demand for houses will _____ and that of Treasury bills will _____.
A) increase; increase B) increase; decrease
C) decrease; decrease D) decrease; increase
3)
4) When people begin to expect a run up in large stock market, the demand curve for bonds shifts to the _____ and the interest rate _____.
A) right; falls B) left; rises C) left; falls D) right; rises
4)
5) When stock prices become less volatile, the demand curve for bonds shifts to the _____ and the interest rate _____.
A) left; falls B) left; rises C) right; rises D) right; falls
5)
6) When bonds become less widely traded, and as a consequence the market becomes less liquid, the demand curve for bonds shifts to the _____ and the interest rate _____.
A) right; falls B) right; rises C) left; rises D) left; falls
6)
7) The demand curve for bonds has the usual downward slope, indicating that at _____ prices of the bond, everything else equal, the _____ is higher.
A) higher; quantity demanded B) higher; demand
C) lower; demand D) lower; quantity demanded
7)
8) Factors that decrease the demand for bonds include
A) an increase in the volatility of stock prices.
B) a decrease in the inflation rate.
C) a decrease in the expected returns on stocks.
D) all of the above.
E) none
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) If wealth decreases, the demand for stocks _____ and that of long-term bonds _____.
A) decreases; decreases B) increases; decreases
C) increases; increases D) decreases; increases
1)
2) If the expected return on ABC stock is unchanged and the expected return on CBS stock falls from
10 to 5 percent, then the expected return of holding CBS stock _____ relative to ABC stock and the demand for ABC stock _____.
A) rises; rises B) rises; falls C) falls; rises D) falls; falls
2)
3) If housing prices are suddenly expected to shoot up, then, other things equal, the demand for houses will _____ and that of Treasury bills will _____.
A) increase; increase B) increase; decrease
C) decrease; decrease D) decrease; increase
3)
4) When people begin to expect a run up in large stock market, the demand curve for bonds shifts to the _____ and the interest rate _____.
A) right; falls B) left; rises C) left; falls D) right; rises
4)
5) When stock prices become less volatile, the demand curve for bonds shifts to the _____ and the interest rate _____.
A) left; falls B) left; rises C) right; rises D) right; falls
5)
6) When bonds become less widely traded, and as a consequence the market becomes less liquid, the demand curve for bonds shifts to the _____ and the interest rate _____.
A) right; falls B) right; rises C) left; rises D) left; falls
6)
7) The demand curve for bonds has the usual downward slope, indicating that at _____ prices of the bond, everything else equal, the _____ is higher.
A) higher; quantity demanded B) higher; demand
C) lower; demand D) lower; quantity demanded
7)
8) Factors that decrease the demand for bonds include
A) an increase in the volatility of stock prices.
B) a decrease in the inflation rate.
C) a decrease in the expected returns on stocks.
D) all of the above.
E) none