During the Great Moderation Experienced in the United States During

question 102

Multiple Choice

During the Great Moderation experienced in the United States during the 1990s the volatility of inflation and growth:

• A) moved in opposite directions.
• B) both dropped significantly.
• C) both increased but only slightly.
• D) disappeared.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuer.

Yield to Maturity

The anticipated full income on a bond, provided it is held through to its expiration date.

Interest Rate Risk

The risk of losing money on investments because of changes in interest rates.

Zero Coupon Bond

A debt security that does not pay periodic interest (coupon) payments and is instead issued at a substantial discount to its face value, with the return being the difference between the purchase price and the face value at maturity.