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Financial instruments are different from money because they can act as a store of value and money cannot. can't be a means of payment but

  1. Financial instruments are different from money because they
  1. can act as a store of value and money cannot.
  2. can't be a means of payment but money can.
  3. can allow for the transfer of risk.
  4. have greater liquidity.

  1. Considering the value of a financial instrument, the circumstances under which the payment is to be made influence the value because
  1. we like uncertain payoffs because this adds to the return.
  2. payments that are made when we need them the most are more valuable.
  3. the sooner the payment is to be made the better.
  4. we know when certain events are going to occur and that is when we want the payment.

  1. Bond rating agencies rate bonds based on characteristics of the borrower. These agencies are an example of a financial market response designed to
  1. increase information asymmetry.
  2. decrease the real return to bondholders.
  3. provide a lower cost solution to the high cost of information.
  4. transfer risk from the buyer to the rating agency.

  1. Financial instruments can transfer
  1. neither resources nor risk between people.
  2. resources between people but not risk.
  3. both resources and risk between people.
  4. risk but not resources between people.

  1. In comparing money to a U.S. Treasury bond held by an individual,
  1. the Treasury bond is an asset but money is not.
  2. money is an asset but the U.S. Treasury bond is a liability of the individual.
  3. both are stores of value.
  4. money is a store of value but the U.S. Treasury bond is not.

  1. The Consumer Price Index (CPI)
  1. is calculated using a basket of goods and services adjusted annually by government statisticians.
  2. answers the question, "How much more does it cost today to buy the same basket of goods and services that were purchased at some fixed time in the past?"
  3. does not suffer from substitution bias because the basket used to measure prices changes every year.
  4. understates the impact of price changes.

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