If the Federal Reserve Buys $3 Billion Worth of Japanese

question 32

Multiple Choice

If the Federal Reserve buys $3 billion worth of Japanese yen and sells $5 billion of euros,how does this affect the balance of payments?

• A)Falls by $2 billion
• B)Rises by $2 billion
• C)Rises by $3 billion
• D)Falls by $5 billion

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Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, taking into account its current market price, face value, interest rate, and time to maturity.

Semi-Annually

Occurring or conducted twice a year.

Face Value

The nominal or dollar value printed on a bond, stock, or other financial instrument, representing the amount due at maturity.

Coupon Rate

The interest rate on a bond paid by the issuer, which is a fixed percentage of the bond's face value, yielding regular interest payments to the bondholder.