Question 1 --/1 What is the effect of an increase in increase in patience on the market for loanable funds? (hint: draw the corresponding supply and demand graph) 1 Supply of loanable funds increases, lowering interest rates and increasing the equilibrium quantity of loans Supply of loanable funds decreases, raising interest rates and decreasing the equilibrium quantity of loans w Demand for loanable funds increases, lowing interest rates and increasing the equilibrium quantity of loans Demand for loanable funds decreases, lowering interest rates and increasing the equilibrium quantity of loans Question 2 --/1 In equilibrium, all equally risky investments must earn the same rate of return 1) True 2 False 3 True for risk-free investments only 4 True for bonds only Question 3 --/1 What is likely the most profitable stock investment strategy if you do not have any "insider" information? Buy and hold a large portfolio of US stocks 2 Buy and hold a large portfolio of US and foreign stocks 3 Randomly buy and sell US and foreign stocks each day 4) 2 and 3 provide the same expected return