Which of the Following Is Likely to Happen During a Boom

question 107

Multiple Choice

Which of the following is likely to happen during a boom?

• A) The Fed will lower the federal funds rate.
• B) The Fed will increase the federal funds rate.
• C) The Fed will increase the supply of money.
• D) The Fed will lower the reserve requirement.

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Definitions:

Coupon Bond

A bond that offers interest payments to its holder through coupons attached to the bond, redeemable at specified intervals before the bond's maturity date.

Zero Coupon Bond

A bond that is issued at a discount to its face value and pays no interest before maturity, when its full face value is repaid.

Nominal Market Yield

The stated or face interest rate of a bond or other fixed-income security without adjusting for inflation.

Semi-Annually

Occurring or calculated twice a year, typically every six months.