The Yield on a Bond

question 34

Multiple Choice

The yield on a bond

• A) is fixed in advance, like the interest rate on a bank account
• B) is directly proportional to the term to maturity
• C) is inversely related to the bond price
• D) is inversely related to the face value of the bond
• E) in unrelated to the coupon rate

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Definitions:

Official Money Supply

The total amount of monetary assets available in an economy at a specific time, as measured and published by the central bank.

Precautionary Demand

The desire to hold cash or liquid assets as a safeguard against potential financial emergencies.

Speculative Demand

The demand for assets or goods not for their immediate consumption or use, but for the purpose of resale at a higher price in the future.

Transaction Demand

The demand for money as a medium of exchange, influenced by the level of economic activity.