Banks acquire the funds that they use lo purchase income-earning assets from suc

Question

Banks acquire the funds that they use lo purchase income-earning assets from such sources as: Cash from receivables in the process of collection Savings accounts. Reserves. Deposits at other banks. Simple loans. Inflation results in: Ease of planning for the future. Ease of comparing prices over time. Lower nominal interest rates. Difficulty interpreting relative price movements Foreign exchange rate stability is important because a decline in the value of the domestic currency will the inflation rate, and an increase in the value of the domestic currency makes domestic industries competitive with competing foreign industries. increase; more increase:less decrease; more decrease;less The FISHER EFFECT states that when innation increases then Interest rates will rise. True False Zero Coupon Bonds typically offer the lowest interest rates to bond investors, True False The larger the interest rate "spread" on a bond, the greater the risk assumed by the investor. True False

Explanation / Answer

1 C

2 C

3 B

4 b

5 a

6 a

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