Refer to the Following Figure When Answering the Following Questions

question 64

Multiple Choice

Refer to the following figure when answering the following questions.
Figure 17.1: Capital Arbitrage
-Consider Figure 17.1. If there is an increase in the real interest rate, then curve ________ would shift to curve ________.

• A) d; c
• B) b; a
• C) c; d
• D) a; b
• E) Not enough information is given.

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Definitions:

Beginning Balance

The amount of money in an account at the start of a new accounting period, carried over from the end of the previous period.

Ending Balance

The final amount in an account at the end of a reporting period after all debits and credits have been accounted for.

Minimum Legal Capital

The least amount of capital that must be raised through the issue of shares for a corporation to be legally established.

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer.