Explain briefly the default risk premium of treasury bonds relative to corporate bonds.

.1. Briefly explain at least three functions of money.

2. Differentiate between “dollarization” and currency substitution.

3. Briefly explain at least two denominations of the money supply.

4. Using a discount bond, justify the statement “Bond prices and interest rates are inversely related, other things being equal.”

5. Explain any two of the factors that might change the supply of bonds.

6. Explain briefly the default risk premium of treasury bonds relative to corporate bonds.

7. Briefly explain the relationship between interest rate and inflation assuming the Fisher Effect.

8. Assuming the Pure Expectations Theory, explain the implications of an upward sloping yield curve and a downward sloping yield curve, respectively.