In the Portfolio Balance Model, Other Things Equal, the Issuance

question 9

Multiple Choice

In the portfolio balance model, other things equal, the issuance of new bonds by a home corporation will __________ the domestic interest rate and, especially if home and Foreign bonds are very good substitutes for each other, will lead to __________ of the Home currency.

• A) decrease; a depreciation
• B) decrease; an appreciation
• C) increase; a depreciation
• D) increase; an appreciation

---

Definitions:

Accounting Period

A specific period of time for which financial records are maintained and financial statements are prepared.

Unearned Revenue

Refers to the money received by a company for goods or services yet to be delivered or performed, thus considered a liability.

Prepayment

The act of paying for a good, service, or expense in advance before receiving or incurring it.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate revenues and expenses to the period in which they actually occurred.