As a person's wealth increases, which of the following portfolio holdings is likely to increase the least?

An increase in the discount rate will result in:

A) increase in bank reserves and a decrease in the federal funds rate. B) increase in bank reserves and an increase in the federal funds rate. C) decrease in bank reserves and a decrease in the federal funds rate. D) decrease in bank reserves and an increase in the federal funds rate.

A key reason that firms and financial institutions might participate in an interest rate swap is

A) to transfer interest rate risk to parties that are more willing to bear it. B) the low information costs of swaps compared with other derivative contracts. C) the greater liquidity of swaps compared with other derivative contracts. D) the favorable tax implications of swaps compared with other derivative contracts.