Chapter 3 Interest and Interest Rate 1、Single Choice 1-5A、C、C、A、A 6-10D、D、B、C、D 2、Multiple Choice ACD、BCD、BC、ABCD、AD 3 ShortAnswer Questions 1.Answer:Even though the nominal rate for the mortgage appears high,the real cost of borrowing the funds is-1%.Yes,under this circumstance it would be reasonable to make this purchase. 2.Answer:The expected return on bonds would decrease relative to other assets resulting in a decrease in the demand for bonds.The leftward shift of the bond demand curve results in a new lower equilibrium price for bonds.Chapter 3 Interest and Interest Rate 1、Single Choice 1-5 A、C、C、A、A 6-10 D、D、B、C、D 2、Multiple Choice ACD、BCD、BC、ABCD、AD 3、Short Answer Questions 1. Answer: Even though the nominal rate for the mortgage appears high, the real cost of borrowing the funds is -1%. Yes, under this circumstance it would be reasonable to make this purchase. 2. Answer: The expected return on bonds would decrease relative to other assets resulting in a decrease in the demand for bonds. The leftward shift of the bond demand curve results in a new lower equilibrium price for bonds