7 Andy keeps his savings in a money Charlie keeps his in a b

7. Andy keeps his savings in a money Charlie keeps his in a bank. Who is using direct finance market mutual fund, Ben ineps a. Andy b. Ben C. Charlie d. all three You take $500 out of your checking account and put it into a money market dest Is the overall effect on M1 and M2? 8. a M1 fall by $500, M2 rises by $500 b. M1 is unchanged, M2 is unchanged c. M1 falls by $500, M2 is unchanged d. M1 is unchanged, M2 rises by $500 9, Aaron takes$100 out of his checking account and pts in his gig smut- from his money market mutual fund in the form of cash The sotal eflet istsa M2 a. is unchanged, fall by $1.00 b. is unchanged, is unchanged c. rises by $100, falls by $100 d. rises by $100, is unchanged 10. A zero coupon bond, trading @$950 for a $1000 payment would have a rate of a. 4.96% b. 5.10% c. 6.11% d. 5.26% 11. Gary has $5000 in cash. He deposits $1000 in his checking account, buys $500 puts $1500 in his money-market mutual fund, and buys a $2000 CD. The effect o of $3500 a. True b. False 12. An investor who has a tax rate of 40% and expects to earn aeturn of 61% t tax rate expected return of 2.6%. a. True b. False 13. A $100 bill represents inside money a. True b. False 14. A travelers check represents inside money a. True b. False

Solution

Solution:

7) Solution: Ben

Explanation: As Ben is not using third party to finance the funds thus is using direct finance

8) Solution: M1 falls by $500, M2 is unchanged

Explanation: M1 is inclusive of cash and checking deposits, and M2 consists of all elements of M1 and \"near money.\" Near money refers to money market securities, mutual funds, savings deposits, and other time deposits

9) Solution: rises by $100; is unchanged

Explanation: M1 is inclusive of cash and checking deposits, and M2 consists of all elements of M1 and \"near money.\" Near money refers to money market securities, mutual funds, savings deposits, and other time deposits

10) Solution: 5.26%

Working: (1000-950) / 950.

I have answered the first four parts as per the norms