If Interest Rates Suddenly ____, Those Existing Bonds That Have

question 62

Multiple Choice

If interest rates suddenly ____, those existing bonds that have a call feature are ____ likely to be called.

• A)decline; more
• B)decline; less
• C)increase; more
• D)None of these are correct.

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Definitions:

Inferior Good

An inferior good is a type of product whose demand decreases as the income of the consumer increases, in contrast to normal goods.

Income Elasticity

Measures how the demand for a product or service changes in response to changes in consumer income.

Positive Elasticity

Occurs when the demand for a product increases as the price increases, indicating a direct relationship between price and demand.