Which of the following statements is true about bonds? 1) A bond's dollar price is calculated as a growth rate. 2) The dollar price and interest rate of a bond have a positive relationship. 3) Bonds can never default. 4) The dollar price and interest rate of a bond have an inverse relationship. 5) Bonds are ownership shares in a firm.
Which of the following statements is true about bonds? 1) A bond's dollar price is calculated as a growth rate. 2) The dollar price and interest rate of a bond have a positive relationship. 3) Bonds can never default. 4) The dollar price and interest rate of a bond have an inverse relationship. 5) Bonds are ownership shares in a firm.
Chapter26: Monetary Policy
Section: Chapter Questions
Problem 3SQP
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![Which of the following statements is true about bonds?
1) A bond's dollar price is calculated as a growth rate.
2) The dollar price and interest rate of a bond have a positive relationship.
3) Bonds can never default.
4) The dollar price and interest rate of a bond have an inverse relationship.
5) Bonds are ownership shares in a firm.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcedcc193-8d21-4752-897e-24e941906088%2Fabf70e2f-688e-495a-be09-b60533b18271%2Fi374cto_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Which of the following statements is true about bonds?
1) A bond's dollar price is calculated as a growth rate.
2) The dollar price and interest rate of a bond have a positive relationship.
3) Bonds can never default.
4) The dollar price and interest rate of a bond have an inverse relationship.
5) Bonds are ownership shares in a firm.
![Suppose Dennis deposits $750 that he found floating down to the earth from the
sky into the financial system. Assuming a 25% reserve ratio, that all banks lend all
excess reserves, and that all loans are redeposited into the banking system, how
much money will be created by Dennis's act?
Only the central bank can create money, so this act will not affect the
1)
amount of money in the economy.
O2) $750 will be created.
3) $1000 will be created.
4) $3000 will be created.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcedcc193-8d21-4752-897e-24e941906088%2Fabf70e2f-688e-495a-be09-b60533b18271%2Ftd6skdr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose Dennis deposits $750 that he found floating down to the earth from the
sky into the financial system. Assuming a 25% reserve ratio, that all banks lend all
excess reserves, and that all loans are redeposited into the banking system, how
much money will be created by Dennis's act?
Only the central bank can create money, so this act will not affect the
1)
amount of money in the economy.
O2) $750 will be created.
3) $1000 will be created.
4) $3000 will be created.
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Publisher:
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