When the Fed Buys Assets Other Than Short-Term Government Bonds

question 81

Multiple Choice

When the Fed buys assets other than short-term government bonds it is called:

• A) the inflation tax.
• B) fiscal policy.
• C) term auction credit.
• D) quantitative easing.
• E) seignorage.

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Definitions:

Priced Factor

An element affecting the pricing of securities that is reflected in market prices due to its influence on asset returns.

Market Illiquidity

A situation in which an asset cannot be easily sold or exchanged for cash without a substantial loss in value.

Book-to-market Ratio

A valuation metric comparing the book value of a company to its market price.

Momentum

An investment strategy that involves buying securities that have had high returns over a certain period and selling those that have had poor returns, based on the belief that trends will continue.