If There Is a Shortage of Loanable Funds, Then

question 31

Multiple Choice

If there is a shortage of loanable funds, then

• A) the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium.
• B) the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium.
• C) the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium.
• D) the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.

Understand the basics of convertible bonds and conversion ratios.

Grasp the concept and calculations of conversion premiums.

Comprehend the fundamentals of options, including calls and puts, and their pricing.

Understand the concept of the risk-free rate of return and its computation.

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Definitions:

Reconstruction Amendments

Amendments to the United States Constitution adopted between 1865 and 1870, including the 13th, 14th, and 15th amendments, which abolished slavery, granted citizenship rights, and protected voting rights regardless of race, respectively.

Federal Government

The national government of a federation, which holds the authority to govern issues that affect the entire country, contrasted with state or local governments.

Individual Freedoms

The rights and liberties that can be claimed by individuals by virtue of being human; often include freedom of speech, religion, and the press.