1)

If a $10,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity is

Select one:

A. 5 percent.

B. 10 percent.

C. 50 percent.

D. 100 percent.

2)

The interest rate that equates the present value of payments received from a debt instrument with its value today is the

Select one:

A. real interest rate.

B. yield to maturity.

C. current yield.

D. simple interest rate.

3)

Question text

If you expect the inflation rate to be 4 percent next year and a one year bond has a yield to maturity of 7 percent, then the real interest rate on this bond is

Select one:

A. -3 percent.

B. -2 percent.

C. 3 percent.

D. 7 percent.

4)

Higher government deficits ________ the supply of bonds and shift the supply curve to the ________, everything else held constant.

Select one:

A. decrease; right

B. increase; right

C. increase; left

D. decrease; left