When the Price Is ________ the Equilibrium Price,we Would Expect

question 134

Multiple Choice

When the price is ________ the equilibrium price,we would expect there to be a ________,causing the market to put ________ pressure on the price until it went back to the equilibrium price.

• A) above; surplus; upward
• B) above; shortage; downward
• C) below; surplus; upward
• D) below; shortage; downward
• E) above; surplus; downward

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Definitions:

Coupon Bond

A bond that pays the holder a fixed interest rate (the coupon) periodically until maturity, at which point the principal and final interest payment are made.

Par Value

Par value is the face value of a bond or stock as stated by the issuing company, which does not necessarily reflect its market value.

Convertibles

Securities, typically bonds or preferred shares, that can be converted into a predetermined number of common shares at the option of the holder.