Assume That to Cool Off the Economy and Decrease Expectations

question 37

Multiple Choice

Assume that to cool off the economy and decrease expectations for inflation, the Federal Reserve tightened the money supply, causing an increase in the risk-free rate, rRF. Investors also became concerned that the Fed's actions would lead to a recession, and that led to an increase in the market risk premium, Under these conditions, with other things held constant, which of the following statements is most correct?

• A) The required return on all stocks would increase by the same amount.
• B) The required return on all stocks would increase, but the increase would be greatest for stocks with betas of less than 1.0.
• C) Stocks' required returns would change, but so would expected returns, and the result would be no change in stocks' prices.
• D) The prices of all stocks would decline, but the decline would be greatest for high-beta stocks.
• E) The prices of all stocks would increase, but the increase would be greatest for high-beta stocks.

Recognize the importance of discussing U.S. immigration within a global context.

Identify and explain the various forms of leisure in modern cities and their significance to different ethnic groups, classes, and sexes.

Understand the geographic distribution and key characteristics of the iron and steel industry in the United States at the turn of the 20th century.

Recognize the transformation in the scale and dynamics of industrial development in the United States by the end of the 19th century.

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Definitions:

Hit-and-Run Tactics

Military techniques involving sudden, brief attacks followed by a swift withdrawal, used by smaller, mobile forces against larger, less-mobile ones.

Continental Army

The revolutionary war army authorized by the Continental Congress in 1775, led by General George Washington, to fight against British rule.

Continental Army

A revolutionary war army established by the Second Continental Congress in 1775, led by General George Washington, to fight against British forces.

Savannah

A flat grassland ecosystem, typically found in tropical and subtropical regions, characterized by scattered trees and abundant animal life.