ECO121 - 26,29

A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a

• bond

• stock

• mutual fund

• all are correct

If Research in Motion, Inc. sells a bond it is

• borrowing directly from the public.

• borrowing indirectly from the public.

• lending directly to the public.

• lending indirectly to the public.

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

• a junk bond

• a municipal bond

• a U.S. government bond

• a corporate bond issued by Proctor & Gamble Corporation

Stock represents

• a claim to a share of the profits of a firm.

• ownership in a firm.

• equity finance.

• All of the above are correct

Compared to stocks, bonds offer the holder

• lower risk and lower potential return.

• lower risk and higher potential return.

• higher risk and lower potential return.

• higher risk and higher potential return.

Which of the following is an example of barter?

• A parent gives a teenager a $10 bill in exchange for her babysitting services.

• A homeowner gives an exterminator a check for $50 in exchange for extermination services.

• A barber gives a plumber a haircut in exchange for the plumber fixing the barber’s leaky faucet.

• All of the above are examples of barter.

Liquidity refers to

• the ease with which an asset is converted to the medium of exchange.

• the measurement of the intrinsic value of commodity money.

• the measurement of the durability of a good.

• how many time a dollar circulates in a given year.

The “yardstick” people use to post prices and record debts is called

• a medium of exchange.

• a unit of account.

• a store of value.

• liquidity.

Fiat money

• is worthless.

• has no intrinsic value.

• may be used as a medium of exchange, but is not legal tender.

• refers to highly liquid assets that do not serve as a medium of exchange.

M1 includes

• currency.

• demand deposits.

• traveler's checks.

• All of the above are correct.