the economics of money, banking, and financial markets

111 #

© 2014 Pearson Canada Inc.#

21. 
    

    By subtracting from the interest rate of a Canada coupon bond the interest rate of a similar
    maturity's real return bond, provides us with an insight about ____.
    A) the expected inflation
    B) the real interest rate
    C) the current yield
    D) the discounted yield
    Answer: A
    Diff: 1 Type: MC Page Ref: 81
    Skill: Recall
    Objective List: 4.3 Examine the distinction between real and nominal interest rates

    
    


22. 
    

    If the interest rate on a Real Return Bond is 2 percent and the interest rate on a Canada bond
    of similar maturity is 5 percent then the expected rate of inflation is equal to ____.
    A) -3 percent
    B) 7 percent
    C) 3 percent
    D) 2 percent
    Answer: C
    Diff: 2 Type: MC Page Ref: 81
    Skill: Applied
    Objective List: 4.3 Examine the distinction between real and nominal interest rates

    
    


23. 
    

    If the interest rate on a Real Return Bond is 5 percent and the interest rate on a Canada bond
    of similar maturity is 2 percent then the expected rate of inflation is equal to ____.
    A) -3 percent
    B) 7 percent
    C) 3 percent
    D) 2 percent
    Answer: A
    Diff: 2 Type: MC Page Ref: 81
    Skill: Applied
    Objective List: 4.3 Examine the distinction between real and nominal interest rates

    
    


24. 
    

    If the interest rate on a Real Return Bond is 2 percent and the interest rate on a Canada bond
    of similar maturity is 5 percent then ____ is equal to 3 percent.
    A) the expected rate of inflation
    B) the yield to maturity
    C) current yield
    D) expected interest rate
    Answer: A
    Diff: 2 Type: MC Page Ref: 81
    Skill: Applied
    Objective List: 4.3 Examine the distinction between real and nominal interest rates