About corporate stocks and corporate bonds

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1. Which of the following assets is best described as a corporate IUO?

a. a share of a corporate stock

b. a corporate bond

c. a Treasury bill

d. a Treasury bond

2. If financial intermediation breaks down, the component of GDP that is most affected is

a. consumption

b. investment

c. government purchases

d. net exports

3. In a poor developing country, the level of entrepreneurial activity will be relatively and the percentage of entrepreneurs from rich families will be relatively .

a. high, high

b. high, low

c. low, high

d. low, low

4. An increase in government borrowing will lower which of the following

a. market interest rates

b. the quantity of loanable funds traded

c. household saving

d. firm investment

5. Which of the following statements about corporate stocks and corporate bonds is true?

a. the return to bonds is generally riskier

b. stocks are liabilities to shareholders and bonds are ownership claims held by shareholders

c. both are used by firms to raise funds for investment projects

d. all of the above.

Reference no: EM133272524

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