1. A change in the relative return of a bond affects the bond's risk premium.

True/False

2. Default risk is measured by the

A)term premium.

B) risk premium.

C) credit premium.

D) none of the above.

3. A change in the risk of a bond affects the bond's risk premium.

True/False

4. A downward sloping yield curve indicates a possible future recession.

True/False

5.An AAA bond has lower default risk than a BBB bond.

True/False

6. A decrease in household wealth increases the risk premium of corporate bonds.

True/False

7. A change in the profit opportunities of a company affects the risk premium of that company's bonds.

True/False

8. A change in the interest rate does not shift the supply of bonds.

True/False

A decrease in the money supply leads to a long-run increase in the equilibrium interest rate if the _____ effect dominates other effects.

A)liquidity

B) price level

C)expected inflation

D) none of the above

10. An increase in household wealth causes the _____ bonds to shift and for equilibrium interest rates to

A) demand for, rise.

B) demand for, fall.

C) supply of, rise.

D) supply of, fall.