If the FOMC Decides to Engage in the Selling of Government

question 149

Multiple Choice

If the FOMC decides to engage in the selling of government bonds, what is the effect on the money supply?

• A) a decrease
• B) an increase
• C) no change
• D) an initial increase followed by an additional rise when the bonds mature

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Definitions:

Market Risk

Also known as systemic risk, it's the potential for investors to experience losses due to factors that affect the overall performance of the financial markets.

Unique Risk

Referred to as unsystematic risk, it denotes the risk linked to a particular company or sector.

Firm-specific Risk

Risk associated with an individual company, as opposed to the market as a whole.

Efficient Frontier

A graphical representation in portfolio management that shows the best possible investment portfolios that offer the highest expected return for a given level of risk.