The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?

Related Mcqs:

1. Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ?

   A. currency arbitrage
   B. interest arbitrage
   C. short positions
   D. long positions

2. Under a system of floating exchange rates relatively low productivity and high inflation rates in the United States results in a (an) ?

   A. increase in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
   B. increase in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar
   C. decrease in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
   D. decrease in the demand for foreign currency and increase in the supply of foreign currency and a appreciation in the dollar

3. Under a system of floating exchange rates relatively high productivity and low inflation rates in the United States results in a (an) ?

   A. increase in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
   B. increase in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar
   C. decrease in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
   D. decrease in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar

4. When interest rate rise, other things equal, we can expect the quantity of real money holding to ?

   A. fall
   B. increase
   C. not change
   D. None of these

5. When money demand is expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the interest rate ?

   A. None of these answers
   B. decrease the quantity demanded of money
   C. increase the quantity demanded of money
   D. decreases the demand for money
   E. increases the demand for money

6. Assume identical interest rates on comparable securities in the United States and foreign countries. Suppose investors anticipate that in the future the U.S dollar will depreciate against foreign currencies. investment funds would tend to ?

   A. flow from the United States to foreign countries
   B. flow from foreign countries to the United States
   C. remain totally in foreign countries
   D. remain totally in the United States

7. The difference between bid (buying) rates and ask (selling) rates is called the ?

   A. profit
   B. arbitrage
   C. spread
   D. forward transaction

8. Under floating exchange rates, expectations of higher interest rates are likely to cause an ____ of the exchange rate?

   A. depreciation
   B. appreciation
   C. fall
   D. devaluation

9. If the quantity of money demanded exceeds the quantity of money supplied then the interest rate will ?

   A. change in a certain direction
   B. remain constant
   C. fall
   D. rise

10. If a nation’s interest rates are relatively low compared to those of other countries. then the exchange value of its currency will tend to ?

    A. not be affected
    B. appreciate
    C. depreciate
    D. fluctuate more than if interest rates were high