the economics of money, banking, and financial markets

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9. 
   

   In October 2008, the stock market crashed, falling by ____ from its peak value a year
   earlier.
   A) over 40 percent
   B) over 30 percent
   C) over 50 percent
   D) over 25 percent
   Answer: A
   Diff: 1 Type: MC Page Ref: 143
   Skill: Applied
   Objective List: 7.2 Determine how information in the market affects asset prices

   
   


10. 
    

    An increase in uncertainty for the economy will ____.
    A) increase stock prices due to a higher required return
    B) not affect stock prices
    C) increase stock prices due to a lower required return
    D) depress stock prices due to a higher required return
    Answer: D
    Diff: 2 Type: MC Page Ref: 143
    Skill: Applied
    Objective List: 7.2 Determine how information in the market affects asset prices

    
    


11. 
    

    Dishonest corporate accounting procedures would cause stock prices to ____.
    A) remain unchanged
    B) decrease due to lower expected dividend growth and lower required return
    C) decrease due to lower expected dividend growth and higher required return
    D) increase due to higher expected dividend growth and lower required return
    Answer: C
    Diff: 2 Type: MC Page Ref: 142 - 143
    Skill: Applied
    Objective List: 7.2 Determine how information in the market affects asset prices