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  • Interest rates are important to financial institutions since an interest rate increase ________ the cost of acquiring funds and ________ the income from assets. #111
  • The higher the standard deviation of returns on an asset, the ________ the asset's ________. #112
  • In a recession when income and wealth are falling, the demand for bonds ________ and the demand curve shifts to the ________. #113
  • During business cycle expansions when income and wealth are rising, the demand for bonds ________ and the demand curve shifts to the ________. #114
  • Higher expected interest rates in the future ________ the demand for long-term bonds and shift the demand curve to the ________. #115
  • Lower expected interest rates in the future ________ the demand for long-term bonds and shift the demand curve to the ________. #116
  • The supply curve for bonds has the usual upward slope, indicating that as the price ________, ceteris paribus, the ________ increases. #117
  • When the price of a bond is above the equilibrium price, there is excess ________ in the bond market and the price will ________. #118
  • When the price of a bond is below the equilibrium price, there is excess ________ in the bond market and the price will ________. #119
  • The risk structure of interest rates is #120
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