Which of the Following Statements Is True If Interest Rates

question 122

Multiple Choice

Which of the following statements is true if interest rates were zero?

• A) The demand for bonds increases because bonds will be a more attractive alternative to money.
• B) People will hold their wealth in the form of money rather than in bonds.
• C) Bonds and money will become perfect substitutes since both are non-interest earning assets.
• D) The supply of bonds will increase.

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Definitions:

Undisclosed Principal

A principal whose identity is concealed from the third parties with whom the agent is dealing; the rights and obligations of the parties depend on whether the agent makes it clear that she is representing an undisclosed principal rather than operating on her own behalf.

Continuing Business

An ongoing enterprise that maintains its operations over time, adapting to changes as necessary to remain viable.

Consent

Agreement or permission for something to happen, given by someone with full understanding of what is involved.

Modified

Changed or adjusted from the original form, purpose, or condition.