Exam 13: Saving, Investment, and the Financial System

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of Graco stock traded that day?

Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect

Atlas Corporation is in sound financial condition. It sells a long-term bond. Which of the following make the interest rate on this bond lower than otherwise?

Scenario 26-2. Assume the following information for an imaginary, closed economy. GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion; and taxes = $0.9 trillion. -Refer to Scenario 26-2. For this economy, private saving is equal to

On which of these bonds is the prospect of default least likely?

The term loanable funds refers to all income that is not used for consumption.

Suppose the market for loanable funds is in equilibrium. What would happen in the market for loanable funds, other things the same, if the Congress and President increased the maximum contribution limits to 401k) and 403b) tax- deferred retirement accounts?

Which of the following could explain a decrease in the interest rate and an increase in the equilibrium quantity of investment?

What is a mutual fund?

Scenario 26-2. Assume the following information for an imaginary, closed economy. GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion; and taxes = $0.9 trillion. -Refer to Scenario 26-2. Suppose, for this economy, the relationship between the real interest rate, r, and investment, I, is given by the equation I = 10.78 - 3.03r. If, for example, r = 10, this means that the real interest rate is 10 percent.) The equilibrium real interest rate for this economy is

A low price-earnings ratio indicates that either the stock is

Which of the following would likely make the interest rate on a bond higher than otherwise?

A checking deposit functions as

Over-the-Rhine Cheese Corporation had a P/E ratio of 20, retained earnings of $0.80 per share and a dividend of $1.70. What was its dividend yield?

Northwest Wholesale Foods sells common stock. The company is using

Figure 26-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars. -Refer to Figure 26-4. If the equilibrium quantity of loanable funds is $50 billion and if the equilibrium nominal interest rate is 8 percent, then

The demand for loanable funds comes from saving and the supply of loanable funds comes from investment.

The primary economic function of the financial system is to

Identify each of the following acts as representing either saving or investment. a. Fred uses some of his income to buy government bonds. b. Julie takes some of her income and buys mutual funds. c. Alex purchases a new truck for his delivery business using borrowed funds. d. Elaine uses some of her income to buy stock in a major corporation. e. Henrietta hires a builder to construct a new building for her bicycle shop.

On which of these bonds is the prospect of default most likely?