When the Fed Sells Bonds in the Open Market, We

question 48

Multiple Choice

When the Fed sells bonds in the open market, we can expect the

• A) exchange rate to rise and interest rates to fall.
• B) exchange rate and interest rates to rise.
• C) exchange rate to fall and interest rates to rise.
• D) exchange rate and interest rates to fall.

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Definitions:

Bond Indenture Agreement

A legal contract outlining the terms and conditions between a bond issuer and the bondholders, including details of the bond issue and covenants.

Interest Expense

The cost incurred by an entity for borrowing funds, typically represented as a line item on the income statement reflecting the interest payable on any borrowings.

Maturity

The date on which the principal amount of a loan, bond, or other financial instrument is due to be paid in full.

Semi-Annual Interest

Interest payments made two times a year on a loan or investment.