When the Bank of Canada's Actions Cause Interest Rates on Newly-Issued

question 92

Multiple Choice

When the Bank of Canada's actions cause interest rates on newly-issued bonds to increase from 5% to 6%,the prices of existing bonds

• A) increase.
• B) decrease.
• C) remain unchanged.
• D) increase only if the coupon rate is less than 6%.
• E) increase only if the coupon rate is greater than 6%.

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Definitions:

Transform Boundary

A type of tectonic plate boundary where two plates slide past each other horizontally.

Seafloor Spreading

The process by which new oceanic crust is formed at mid-ocean ridges and slowly moves away from the ridge, contributing to continental drift.

Continental Drift

The theory that Earth's continents have moved over geologic time relative to each other, thus appearing to drift across the ocean bed.

Mid-Atlantic Ridge

A continuous underwater mountain range in the Atlantic Ocean, formed by tectonic plate divergence.