Question

Classify each statement as either true or false.

A. If two short-term assets offer different interest rates, then investors will move their wealth towards the asset with the lower return.
B. There is no practical difference between long-term interest rates and short-term interest rates.
C. Money demand is affected by short-term interest rates and not long-term interest rates.
D. Interest rates on financial assets that mature in ten months or less are long-term interest rates.
E. The opportunity cost of holding money falls when short-term interest rates fall.

Answer 1

The answer and procedures of the exercise are attached in a microsoft excel document.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.