When the Fed Reports a Large Monthly Decrease in the Money

question 96

Multiple Choice

When the Fed reports a large monthly decrease in the money supply, you can be reasonably sure that

• A)the decrease is due to prior open market sales.
• B)the decrease is due to the Fed's enormous influence on borrowing and lending.
• C)the decrease is due to a cumulative process linking the Fed's actions to the money supply.
• D)All of the above are correct.

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Definitions:

Coupon Rate

The per annum interest yield on a bond, shown as a percentage of its principal amount.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturation date.

Zero-Coupon Bonds

Bonds that do not pay interest during their lifetime but are sold at a discount to their face value, which is paid at maturity.

Zero-Coupon Bonds

Bonds that do not pay periodic interest payments and are issued at a discount to their face value, maturing to its full face value.