quantity of loanable funds at 6. Generally, borrowers demand a interest rates. a. Greater; higher b. Smaller, lower c. Greater; lower d. None of these 7. When Japanese interest rates rise and become greater than US interest rates, and if exchange rate expectations remain unchanged, the most likely effect is that the supply of loanable funds provided by Japanese investors to the U.S. will , and the U.S. interest rates will a. Increase; decrease b. Increase; increase c. Decrease; increase d. Decrease; decrease 8. Holding other factors, such as risk, constant, the relationship between the time to maturity and the annualized yield is called: a. The default structure of interest rates b. The term structure of interest rates c. The liquidity structure of interest rates d. The tax structure of interest rates 9. Assume that annualized yields of short-term and long-term securities are currently equal. Suppose that investors suddenly change their views to believe that interest rates will increase in the future. According to the pure expectations theory, this change in belief (and the corresponding actions) would likely cause the yield curve to: a. Become upward sloping b. Become inverted c. Become flat d. Not change 10. The yield on a fixed income security is related to the prevailing risk free rate and related to the security's risk premium. a. Negatively; negatively b. Negatively; positively c. Positively; negatively d. Positively; positively