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Monetary Economics Questions and Answer Grade A+ 2023

Capital Gain - -the amount by which the selling price of an asset exceeds the purchase price -Capital Loss - -The difference between a lower selling price and a higher purchase price resulting in a... financial loss for the seller -Perpetuity - -A coupon bond with infinite time of maturity. -Current Yield - -Annual Intrest / Current Market Price -Default Risk - -The risk that a company will be unable to pay the bond's face amount or interest payments as it becomes due. -Holding Period Return - -[(Dividends + Interest) + ( Ending Price - Beginning Price) - Transaction Costs] / Beginning Price , measures the total percent return during the entire time you've held the asset. -Inflation Indexed Bonds - -a bond that protects the investor against inflation by its linkage to an index of inflation -Inflation- Indexed Bonds - -A bond whose yield equals a fixed real interest rate plus realized (as opposed to expected) inflation. -Inflation Risk - -The risk that the rate of inflation will increase more than the rate of return on an investment -Interest- Rate Risk - -Changing interest rates affect your cost (When borrowing) and your benefits (when saving or investing). -Investment Horizon - -The period of time an investor plans to hold a particular investment. -T- Bill - -bonds issued by the government - risk-free return over a short time- no risk of default -Yield To Maturity - -The interest rate that equates the present value of payments received from a credit market instrument with its value today -Zero Coupon Bond - -Promises a single future payment, such as a US Treasury Bill. -Benchmark Bond - -A low-risk bond, usually a T-Bond, to which the yield on a risky bond is compared to assess its risk [Show More]

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