When the Fed Makes Bonds More or Less Attractive,it Influences

question 127

Multiple Choice

When the Fed makes bonds more or less attractive,it influences the:

• A) Open market decision.
• B) Money multiplier.
• C) Portfolio decision.
• D) Reserve decision.

---

Definitions:

Cost of Retained Earnings

This represents the opportunity cost for a company of using its retained earnings for investment purposes rather than distributing them as dividends.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and the potential for dividends.

Market Yield

The current rate of return anticipated on a bond if held until maturity, expressed as an annual percentage.

Component Cost

The cost related to each source of capital, such as debt and equity, that a company uses for funding.