QUESTION 32

B2

Consider in the file provided the market for a particular corporate bond from a stock perspective.

The blue curve is the _____ because _____.

At yield 2.5%, the market displays _____.

As a result, the yield will _____ , inducing issuers of corporate bonds to have a smaller stock on issue.

Issuers having a smaller stock on issue, as described above, is represented by a _____.

Assume the market is now at equilibrium.

A new market opportunity arises for the companys industrial product, requiring additional funding.

In the diagram of demand and supply of bonds, this shock constitutes _____.

This results in a _____ at equilibrium.

The magnitude of the change in quantity at equilibrium is _____ than the magnitude of the original shock,

due to _____.

Fill in the blanks with answer options:

demand for bonds curve, supply of bonds curve, supply of bonds curve, purchase of bonds curve, sale of bonds curve, demand for reserves curve, supply for reserves curve, demand for shares curve, supply for shares curve, demand for funds curve, supply for funds curve, the higher the yield the less attractive the investment is, the higher the yield the more attractive the investment is, the higher the yield is the less costly the borrowing is, market clearing, excess demand, excess supply, increase, decrease, stay the same, shift of the demand, shift of the supply, movement upwards along the demand curve, movement upwards along the supply curve, higher yield larger quantity, higher yield smaller quantity, lower yield smaller quantity, lower yield larger quantity, smaller, larger, same, the adjustment of the yield, the adjustment of the quantity, slope of the demand, slope of the supply, movement downwards along the supply curve, movement downwards along the demand curve curve

Yield 3% Quantity of corporate bonds (expressed in face value) Yield 3% Quantity of corporate bonds (expressed in face value)