5. 4. The required return to implement a given business project will be if interest rates are lower This implies that businesses will demand a quantity of loanable funds when interest rates are lower. A) greater; lower B) lower; greater C) lower; lower D) greater, greater maintain a larger amount of assets than the other types of depository institutions. A) Credit unions BY Commercial banks C) Life insurance companies D) Savings institutions 6. Assume an investor's tax rate is 20 percent. The beforo-tax yield on a security is 15 percent. What is the after-tax yield? A) 16.00 percent B) 9.25 percent C) 9.00 percent D) 3.00 percent E) none of the above 7. If the real interest rate was stable over time, this would suggest that there is relationship between inflation and nominal interest rate movements. A) a positive B) an inverse C) no D) an uncertain (cannot be determined from information above) 8. If a security can easily be converted to cash without a loss in value, it A) is liquid. B) has a high after-tax yield. C) has high default risk. D) is illiquid. 9. Which of the following is a money market security? A) Treasury note B) municipal bond C) mortgage Dy commercial paper 10. If security prices fully reflect all available information, the markets for these securities are A) efficient. B) primary. C) overvalued. D) undervalued Q3. Why regulators must enforce efficiency in financial markets Q4. Draw figures to show the government, foreign, and households demand for loanable fond 05. LMB Inc. wants to issue 365-day commercial paper. One year T-bills currently have a yield of 6 percent. Assume that a default risk premium of 1.65 percent, a liquidity premium of 0.15 percent, and a 0.35 percent tax adjustment are necessary to sell the commercial paper to investors. What is the appropriate yield the company should offer on its commercial paper? Q6. Knowledge of financial markets is power-explain how? 07. Give a numerical example of how businesses evaluate projects using net present value (NPV) All the Best