If Interest Rates Rose More in the U

question 116

Multiple Choice

If interest rates rose more in the U.S.than in France,then other things the same

• A)U.S.citizens would buy more French bonds and French citizens would buy more U.S.bonds.
• B)U.S.citizens would buy more French bonds and French citizens would buy fewer U.S.bonds.
• C)U.S.citizens would buy fewer French bonds and French citizens would buy more U.S.bonds.
• D)U.S.citizens would buy fewer French bonds and French citizens would buy fewer U.S.bonds.

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Definitions:

Loss On Redemption

The financial loss incurred when a debt instrument, such as a bond, is repaid before its maturity date.

Effective-Interest Method

A method of calculating the amortized cost of a bond and the amount of interest expense over its relevant period.

Amortization

The process of spreading out the cost of an intangible asset over its useful life or the repayment of loan principal over time.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, reflected in its income statement.