9. Money can be moved from surplus spending units (savers) to deficit spending units (borrowers) via: a. Money and capital markets b. Financial institutions c. Both money/capital markets and financial institutions are used to move funds from those who have it to those who need it 10. Everything else equal, an excess demand for securities or supply of securities will cause the yield curve to be upward sloping. a. Short term, short term b. Long term, long term c. Short term, long term d. Long term, short term 11. If fiscal policy dictates in increase in the tax rate across the board (i.e. across all tax-payers, regardless of income) holding the demand for loanable funds constant, the supply of loanable funds curve will most likely: a. Shift left and there will be upward pressure on equilibrium interest rates b. Shift right and there will be upward pressure on equilibrium interest rates c. Shift left and there will be downward pressure on equilibrium interest rates d. Shift right and there will be downward pressure on equilibrium interest rates 12. Which of the following will NOT result in a higher coupon rate (or yield) upon the issue of a bond, everything else equal? a. Lower relative bond rating (such as B instead of AA) b. Longer maturity c. Higher liquidity (i.e. more liquid) d. All of the above will increase the yield 13. Companies are more likely to call bonds when: a. The company has a ratings downgrade b. When interest rates rise c. When they are about to violate the terms of the indenture (like violate a bond covenant) d. When interest rates fall 14. Which of the following statements about bonds versus stocks is FALSE? a. Bonds are safer for the investor, stocks are less safe b. Interest is paid with before tax dollars, dividends are paid with after tax dollars c. Relative to each other, debt (i.e. bonds) reduces the financial risk of the firm, equity does not d. The discount rates for both bonds and stocks is the nominal risk free rate plus risk premium(s)