Answered: Compared to money, bonds are Select…

Compared to money, bonds are Select one: a. less liquid and riskier. b. less liquid and less risky. c. more liquid and less risky. d. less liquid and of equal risk. e. more liquid and riskier.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: A bank may also borrow reserves from its Federal Reserve District Bank at its “discount window.” The…

A: Federal funds rate - Federal Funds Rate is the rate at which the financial institutions lend reserve…

Q: Let's say that you have put $1,000 in your savings account at a local financial institution, and an…

A: The banks which deals with public(Known as commercial banks) are the financial institution whose…

Q: 9. Draw a T-Account for a bank. Also, have the bank conforming to the reserve requirement of 10% and…

A: To draw a T-Account for a bank conforming to the reserve requirement of 10% and capital requirement…

Q: If the bank of Canada ________ bonds, interest rates will fall and the price of bonds will ________.…

A: The central bank conducts open market operations (i.e., purchasing and selling of government bonds)…

Q: Other things constant, a decrease in credit card balances would___ M1 and ___ M2. A. increase;…

A: M1 money supply is the narrow money which is most liquid in nature, it includes cash, traveler's…

Q: Why do bank runs occur a. Asymmetric Information b. Moral Hazard c. Financial dis-imediation…

A: The objective of the question is to understand the reasons behind the occurrence of bank runs.

Q: n general, commercial banks receive their higher interest rates from Group of answer choices a.…

A: Commercial banks pays small interest to savings accounts and generate larger or higher spread of…

Q: The Federal Reserve is offering Treasury bills with a par value of $10 billion for sale. They have…

Q: A reserve requirement of 20 percent means a bank must have at least $3,000 of reserves if its…

A: We have given the reserve requirement as 20%. This means that for every dollar of checkable deposits…

Q: Which of the following IS NOT a task the Federal Reserve undertakes? a. Stabilizing financial…

A: Federal Reserve is the central bank of the U.S. hence, it takes all the responsibilities regarding…

Q: Haley transfers $100 from her checking account and into a money market mutual fund a. Her assets…

Q: How does collateral help to reduce the adverse selection problem in credit market?

A: An adverse selection arises when the quality of the average borrower decreases as the rate of…

Q: 3. How is the interest on reserve balances rate a reservation rate? a. Banks should not demand a…

A: Interest rate on reserve balances refers to the rate that is determined by the central bank when two…

Q: Which of the following forms of money is the least liquid? Answers: a. Certificates of deposit. b.…

A: Money values the exchange of goods in an economy. It is the standard for deferred payment. It is…

Q: Which of the following statements is true? a. A bank’s assets are its uses of funds b. A…

A: A bank is an entity that acts as a financial intermediary to provide loans to investors and accept…

Q: 3.A person deposits $5000 into an account and the reserve requirement is 12.5%. A.Set up a…

A: Here, given information is: New deposits: $5000 Reserve requirements: 12.5% When new money is…

Q: (Refer to Figure). At an interest rate of 8%, there is wa A) an excess demand for money of $400…

A: The interest rate that strikes a balance between the supply and demand of money is known as the…

Q: 8.A bank has an 8 percent reserve requirement, S10.000 in deposits, and has loaned out all it can,…

A: We have given rr=0.08 and deposits = 10,000.

Q: Some financial institutions are classified as depository institutions based on: a. the way they…

A: Financial institutions: - Financial institutions are the companies that indulge in providing…

Q: The more frequently a bank compounds interest, ____ will be. Group of answer choices the higher the…

A: Compound interest is the interest earned on savings that is calculated using both the initial…

Q: Banks are more likely to play a role in financing requiring: Select one: a. Low credit risk. b. Very…

A: One of the primary function of banks is to provide loans and advances of various forms to it's…

Q: 1 Which of the following is a component of money? a) bonds b) saving c) income d) stocks e)…

A: Any object or resource that is extensively used as payment for goods or services is referred to as…

Q: Select TWO true statements. a.…

A: 1. All obligations are subtracted from assets to determine net value. Liabilities are obligations…

Q: Decisions for Tomorrow How much does M1 and M2 change in the following situations? a. $300 is…

A: In an economy, M1 money supply includes all the monetary instruments that are readily available to…

Q: Assets 1. A $10 bill 2. The funds in a money market account 3. A share in a publicly traded company…

A: Liquidity is the degree of quick convertibility of any assets into the cash . The asset is said to…

Q: 1. Gina is thinking of buying a new Chromebook. She compared HP Chromebook for $449 and Acer…

A: Money is universally accepted medium of exchange used to facilitate transactions, measure the value…

Q: Anything can be money if it acts as aa. unit of account.b. store of value.c. medium of exchange.d.…

A: The money demand curve shows the inverse relationship between interest rate and quantity of money…

Q: Assets 1. A share in a publicly traded company 2. The funds in a savings account 3. A $10 bill 4.…

A: Liquidity means how easily the asset can be converted into asset. The longer the time asset takes to…

Question

Compared to money, bonds are

Select one:

less liquid and riskier.

less liquid and less risky.

more liquid and less risky.

less liquid and of equal risk.

more liquid and riskier.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define liquidity -

VIEW

Step 2: Choose the correct answer -

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Which financial innovation allows banks to avoid reserve requirements and to pay interest on deposits? A. Money market funds B. Sweep accounts C. Both money market funds and sweep accounts
MCQ question Give fast and only typed Answer
How does deposit insurance encourage banks to take on too much risk? 1. Banks can make riskier investments because the government has insured banks against losses on their investments 2. Banks can make riskier investments without worrying about deposit withdrawals because the government has insured depositors against losses 3. Deposit insurance encourages banks to increase investments in riskless assets 4. With deposit insurance, depositors have more incentive to withdraw their deposits if the managers make reckless investments
Banks are naturally unstable because they have ______________ liabilities, but __________________ assets. Group of answer choices a. long term; short term b. high; low c. short term; long term d. low; high
Not copy paste
A bank that has assets of $150 billion and a net worth of $30 billion must have Multiple Choice О liabilities of $30 billion. O liabilities of $120 billion. О excess reserves of $120 billion. excess reserves of $30 billion.
No written by hand solution
If the bank rate is 1 percent, what would be the respective deposit rate? a. 0.5 percent cross out b. 1.25 percent cross out c. 0.25 percent cross out d. 1.5 percent cross out e. 0.75 percent cross out Show Transcribed Text plz help me with this question, thx.
9. Which of the following is not an administered rate? a. Discount rate b. ON RRP offering rate c. Federal funds rate d. Interest on reserve balances rate
A bank has a 5 percent reserve requirement, $4,000 in deposits, and has loaned out all it can given the reserve requirement. Select one: a.None of them. b.lt has $1,000 in reserves and $3,000 in loans. c.lt has $20 in reserves and $4,980 in loans. d.It has $200 in reserves and $4,800 in loans.
Banks want to hold as little cash as possible because holding cash a. provides very little liquidity. b. offers a minimal rate of return. c. is risky. d. provides too much liquidity.
A bank can create money by Select one: A. increasing its reserves. B. selling some of its securities. C. lending its excess reserves. D. printing more cheques. O E. converting reserves into securities.