- in Figure 15

question 63

Multiple Choice

- In Figure 15.3,the Fed can use all of the following to decrease the equilibrium interest rate from 6 percent to 2 percent except

• A)Decreasing the reserve requirement.
• B)Selling bonds.
• C)Buying bonds.

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Definitions:

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Coupon Rate

The interest rate on a bond which the issuer pays to the bondholders, generally fixed and paid at specific intervals.

Yield to Maturity

The total anticipated return on a bond if held to its maturity date, including all interest payments and capital gains or losses.

Required Rate of Return

The minimum return an investor expects to achieve by investing in a particular asset, taking into account the risk level of the investment.