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”If bonds of different maturities are close substitutes, their interest rates are more likely to move together.”Is this statement true,false,or uncertain? Explain your answer. (3Marks)
2.Suppose that increases in the money supply led to a rise in stock prices. Does this mean that when you see that the money supply has had a sharp rise in the past week, you should go out and buy stocks? Why or why not? (3Marks)
3. Describe two ways in which financial intermediaries help to lower transaction costs in an economy like Kingdom of Saudi Arabia (2Marks)
4.How can conflicts of interest make financial service firms less efficient? (2Marks)
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