Introduction to Finance

 1. 
(LO 8.1)
What is the “interest rate,” and how is it determined?
 2. 
(LO 8.1)
Describe how interest rates may adjust to an unanticipated 
increase in infl ation.
 3. 
(LO 8.1)
Identify major periods of rising interest rates in U.S. 
history, and describe some of the underlying reasons for these interest 
rate movements.
 4. 
(LO 8.1)
How did the Fed contribute to the recent historically 
low interest rates?
 5. 
(LO 8.1) 
How does the loanable funds theory explain the level of 
interest rates?
 6. 
(LO 8.1) 
What are the main sources of loanable funds? Indicate 
and briefl y discuss the factors that aff ect the supply of loanable funds.
 7. 
(LO 8.1)
Indicate the sources of demand for loanable funds, and 
discuss the factors that aff ect the demand for loanable funds.
 8. 
(LO 8.2)
What are the factors, in addition to supply-and-demand 
relationships, that determine market interest rates?
 9. 
(LO 8.3)
What are the types of marketable securities issued by 
the Treasury?
 10. 
(LO 8.3)
Explain the mechanics of issuing Treasury bills, indic-
ating how the price of a new issue is determined.
 11. 
(LO 8.3)
Describe the dealer system for marketable U.S. govern-
ment securities.
 12. 
(LO 8.3)
What is the tax status of income from federal securities?
 13. 
(LO 8.3)
Describe any signifi cant changes in the ownership pattern 
of federal debt securities in recent years.
 14. 
(LO 8.3)
What have been the recent developments in the maturity 
distribution of marketable interest-bearing federal debt?