Problem 1. Of the following, the most likely effect of an increase in income tax rates would be to?
Problem 2. A 10-year annual payment corporate coupon bond has an expected return of 11% and a required return of 10%. The bond's market price is
Problem 3. A bond that pays interest semiannually has a 6% promised yield and a price of $1045. Annual interest rates are now projected to increase 50 basis points. The bond's duration is 5 years. What is the predicted new bond price after the interest rate change? (Watch your rounding
Problem 4. If the Fed wishes to stimulate the economy it could
I. buy U.S. government securities.
II. raise the discount rate.
III. lower reserve requirements
Problem 5: The Fed increases bank reserves in the system by $75 million. If there are no drains, the expected change in bank deposits is?