chapter 6.1

Chapter 6: Nutrition6.1 Why Your Body Needs Food∙Food contains many substances that provide one with energy as well as the materials needed for their body to grow and repair itselfYour Body – What is it Made of?-∙Made of matter∙The human body is mostly hydrogen, oxygen, carbon and nitrogen (96% of one’s total mass)∙Phosphorus, iron, iodine, etc. are present in small amounts but still very important; without them the body can’t function∙Most elements aren’t present in pure form but joined to form compound s Nutrition-∙Nutrients are material that can be taken into cells and are useful to the body ∙Nutrition is the study of nutrients and their effect on one’s health∙Good nutrition is especially important for teenager b/c of the changes taking place in their bodies; a time of rapid growth and development6.2 Nutrients for Energy∙Bodies need ~ 50 different nutrients∙Most can be classified into one of six groups: carbohydrates, fats, proteins, minerals, vitamins and water∙Nutrients in these groups supply body cells with energy needed to function∙Energy cells obtain from food is called food energy∙B/c energy needed by one’s body is so great food energy is measured in kilojoules Carbohydrates-∙Major source of energy the body needs is from carbohydrates (~ 55%)∙Contain carbon, hydrogen and oxygen atoms arranged in certain ways∙Simple carbohydrates are made up of small, simple molecules, also called sugars(names end in “ose”)∙Glucose in the major source of energy for all body cells∙Complex carbohydrates are larger molecules and are made of many sugar molecules joined together∙ A complex carbohydrate often eaten is starch and glycogen∙Can’t supply energy to body cells immediately and need to be broken into the small sugar molecules they are made of (this process is digestion) ∙Some leftover glucose molecules are stored for future use as glycogen molecules (usually in muscles and the liver)Fats-∙Another source of energy comes from fats∙Fats come from meats, margarine, eggs, dairy products, nuts and oils∙Fat molecules are mad up of carbon, hydrogen and oxygen atoms but fat molecules contain many more hydrogen atoms and fewer oxygen atoms ∙Eat fat molecule contain smaller molecules called fatty acids∙The body stores much of its energy in body fat∙Saturated fats contain as many hydrogen atoms as possible and are found in animal products (ie. meat, milk, cheese, eggs, butter)∙Unsaturated fats have spaces in which more hydrogen atoms can be added and usually come from plant products (ie. corn, peanut oil)∙No more than 30% of food energy should be from fats (no more than 10% saturated fats)∙High amounts of saturated fats increase the amount of cholesterol, a fat-like compound found in animal products, in the blood6.3 Proteins: Nutrients for Growth and Repair∙Proteins form an important nutrient group∙Main function is to help body cells work properly and help in building and repairing these cells∙The building blocks of proteins are amino acids (composed of nitrogen, hydrogen, oxygen and carbon atoms)∙ A molecule of protein is composed of many amino acid molecules joined together ∙One required 20 amino acids to make all proteins needed∙The body can make 12 from atoms supplied by other nutrients eaten, these are the non-essential amino acids since one doesn’t have to eat foods containing t hem ∙The body can’t make 8 amino acids, which are the essential amino acids since one needs to eat foods containing them∙Some proteins are called complete proteins because they contain all eight essential amino acids in adequate amounts∙Some proteins that are missing one or more of the eight essential amino acids are incomplete proteinsHow Your Body Uses Proteins-∙Proteins are needed in every cell∙Some proteins form bones, hair, skin and nails∙Sense organs, nerves and the brain wouldn’t work without other p roteins∙Most important proteins are enzymes, proteins that speed up the rates of chemical reactions within the body∙For energy the body first uses glucose or fatty acids and if none are available then amino acids are used∙The body can’t store amino acids s o if too many proteins are eaten they are converted into fat (change can’t be reversed)∙If not enough protein is eaten the body breaks down body parts to obtain amino acids needed6.4 Minerals and Vitamins∙Two types of nutrients needed in small quantities are minerals and vitaminsMinerals-∙Minerals are elements the body needs for important jobs∙Large amounts of calcium, chlorine, magnesium, phosphorus, potassium, sodium and sulphur are needed∙Small quantities of iron, copper, iodine and zinc are needCalcium: The Most Important Mineral-∙About 2% of a body’s total mass is calcium, in bones and teeth∙Main source of calcium is milk and dairy products∙Calcium is not easily absorbed but when vitamin D is present it is absorbed more easily∙Calcium is mainly used for growth and repair of bones; help nerve impulses travel; help blood clot; needed for muscles to work properlyYour Need for Iron-∙Best source of iron is meet∙Iron is needed in blood cells to pick up oxygen and carry it throughout the body, and deliver it to other cells∙Iron in the muscle cells help them store oxygen∙P eople who don’t eat enough iron have iron-deficiency anemia and feel weak and tired∙Too much iron however is harmfulVitamins-∙Vitamins are nutrients that act as “assistants” to enzymes∙Certain vitamins are needed for the body to use other nutrients (ie. Vitamin C help body cells absorb iron)Classifying Vitamins-∙Divided into two groups depending on if they dissolve in water or fat∙Vitamin C & B are water-soluble; the rest are fat-soluble (can’t be absorbed by the body unless they are eaten with fats)∙Too many fat-soluble can cause serious problems∙Extra amount of vitamins B & C dissolve in body fluids and leave in urine 6.5 Water: The Most Important Nutrient∙Water makes up 55-65% of the human body∙Water is the basic unit of all living things, carries nutrients needed, carries waste products away, and cells need water for the chemical reactions that break down large nutrient molecules∙When one sweats the water on the skin cools the body∙Water lubricates joints and food6.6 Fiber: Not a Nutrient, But Still Important∙Dietary fiber is part of many foods but is not a nutrient b/c it’s not digested∙Best sources are products made with whole-grain flours, fruits and vegetables ∙Is made up of complex carbohydrate molecules but can’t be broken down∙Some types of fiber hold on to water so that feces can move more easily through 6.7 Food Processing∙Food processing refers to anything that is don’t to plant or animal foods before they are eaten (ie. cooking, packaging, freezing, drying)∙Reason from processing food is to preserve it, keep it from going badPreserving Food-∙Often micro-organisms cause food to spoil∙Illness caused by micro-organisms in food often cause food poisoning, produces headaches, nausea, vomiting, diarrhea and occasionally death ∙People process foods by canning, freezing, drying, pickling or smoking it Food Additives-∙ A food additive is a substance added to food during processing∙Substances, called preservatives, help keep food from spoiling∙Additives may be nutrients (ie. vitamins and minerals)∙Foods are fortified when nutrients are added to it that are normally not present in the food∙Foods are enriched when nutrients normally present in foods are increased by food processing∙Nitrites are added to bacon, ham, etc. as preservatives but are believed to cause cancerAdvantages and Disadvantages of Food Processing-∙Advantages include:1.Allowing foods to be stored longer2.Adding convenience3.Adding nutrients to the food∙Disadvantages include:1.Costing more2.Removing vitamins or minerals3.Adding substances to food that may be harmful to peopleFood Labeling-∙In Canada, every package of food must have a label listing all ingredients∙Ingredients are listed in order from the ingredient making up the largest part and ending with the one that makes up the smallest part∙Labels on food also tell the amounts of nutrients in a serving∙Some labels provide a “best before” date6.8 Nutrition and Diet∙ A diet consists of all foods that one regularly eats and drinks∙Food choices have a very important effect on one’s healthA Balanced Diet-∙Health and Welfare Canada developed Canada’s Food Guide to Healthy Eating∙All foods one should eat are divided into 4 groups: grain products, vegetables and fruits, milk products and meat/meat alternatives∙One should include a variety of foods from eat group in their diet Nutrition and World Health-∙~ 10 000 years ago people grew crops and raised domestic animals∙Better methods of farming, fishing and food processing allowed food production to keep up with the growing human population∙Pollution, soil erosion, natural disasters, over fishing, overgrazing and other factors resulted in poorer quality and a lower quantity of many types of foods ∙Over nourishment, eating more food than the body needs, results in obesity (problem in Canada)∙In other countries many are undernourished and starve to die∙ Both forms of malnutrition(“mal” means “bad”) are caused by a lack of one or more important nutrients in a person’s diet∙One of the biggest challenges is how to manage the world’s res ources so all people can obtain enough food。

Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin) Chapter 6 The Risk and Term Structure of Interest Rates6.1 Risk Structure of Interest Rates1) The risk structure of interest rates isA) the structure of how interest rates move over time.B) the relationship among interest rates of different bonds with the same maturity.C) the relationship among the term to maturity of different bonds.D) the relationship among interest rates on bonds with different maturities.Answer: BAACSB: Reflective Thinking2) The risk that interest payments will not be made, or that the face value of a bond is not repaid when a bond matures isA) interest rate risk.B) inflation risk.C) liquidity risk.D) default risk.Answer: DAACSB: Application of Knowledge3) Bonds with no default risk are calledA) flower bonds.B) no-risk bonds.C) default-free bonds.D) zero-risk bonds.Answer: CAACSB: Application of Knowledge4) Which of the following bonds are considered to be default-risk free?A) municipal bondsB) investment-grade bondsC) U.S. Treasury bondsD) junk bondsAnswer: CAACSB: Analytical Thinking5) U.S. government bonds have no default risk becauseA) they are issued in strictly limited quantities.B) the federal government can increase taxes or print money to pay its obligations.C) they are backed with gold reserves.D) they can be exchanged for silver at any time.Answer: BAACSB: Reflective Thinking6) The spread between the interest rates on bonds with default risk and default-free bonds is called theA) risk premium.B) junk margin.C) bond margin.D) default premium.Answer: AAACSB: Application of Knowledge7) If the probability of a bond default increases because corporations begin to suffer large losses, then the default risk on corporate bonds will ________ and the expected return on these bonds will ________, everything else held constant.A) decrease; increaseB) decrease; decreaseC) increase; increaseD) increase; decreaseAnswer: DAACSB: Reflective Thinking8) A bond with default risk will always have a ________ risk premium and an increase in its default risk will ________ the risk premium.A) positive; raiseB) positive; lowerC) negative; raiseD) negative; lowerAnswer: AAACSB: Reflective Thinking9) If a corporation begins to suffer large losses, then the default risk on the corporate bond willA) increase and the bond's return will become more uncertain, meaning the expected return on the corporate bond will fall.B) increase and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall.C) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall.D) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will rise.Answer: AAACSB: Reflective Thinking10) If the possibility of a default increases because corporations begin to suffer losses, then the default risk on corporate bonds will ________, and the bonds' returns will become ________ uncertain, meaning that the expected return on these bonds will decrease, everything else held constant.A) increase; lessB) increase; moreC) decrease; lessD) decrease; moreAnswer: BAACSB: Reflective Thinking11) Other things being equal, an increase in the default risk of corporate bonds shifts the demand curve for corporate bonds to the ________ and the demand curve for Treasury bonds to the________.A) right; rightB) right; leftC) left; rightD) left; leftAnswer: CAACSB: Reflective Thinking12) Other things being equal, a decrease in the default risk of corporate bonds shifts the demand curve for corporate bonds to the ________ and the demand curve for Treasury bonds to the________.A) right; rightB) right; leftC) left; rightD) left; leftAnswer: BAACSB: Reflective Thinking13) A(n) ________ in the riskiness of corporate bonds will ________ the price of corporate bonds and ________ the yield on corporate bonds, all else equal.A) increase; increase; increaseB) increase; decrease; increaseC) decrease; increase; increaseD) decrease; decrease;decreaseAnswer: BAACSB: Reflective Thinking14) An increase in the riskiness of corporate bonds will ________ the price of corporate bonds and ________ the price of Treasury bonds, everything else held constant.A) increase; increaseB) reduce; reduceC) reduce; increaseD) increase; reduceAnswer: CAACSB: Reflective Thinking15) A decrease in the riskiness of corporate bonds will ________ the price of corporate bonds and ________ the price of Treasury bonds, everything else held constant.A) increase; increaseB) reduce; reduceC) reduce; increaseD) increase; reduceAnswer: DAACSB: Reflective Thinking16) An increase in the riskiness of corporate bonds will ________ the yield on corporate bonds and ________ the yield on Treasury securities, everything else held constant.A) increase; increaseB) reduce; reduceC) increase; reduceD) reduce; increaseAnswer: CAACSB: Reflective Thinking17) A decrease in the riskiness of corporate bonds will ________ the yield on corporate bonds and ________ the yield on Treasury securities, everything else held constant.A) increase; increaseB) decrease; decreaseC) increase; decreaseD) decrease; increaseAnswer: DAACSB: Reflective Thinking18) An increase in default risk on corporate bonds ________ the demand for these bonds, but ________ the demand for default-free bonds, everything else held constant.A) increases; lowersB) lowers; increasesC) does not change; greatly increasesD) moderately lowers; does not changeAnswer: BAACSB: Reflective Thinking19) A decrease in default risk on corporate bonds ________ the demand for these bonds, and________ the demand for default-free bonds, everything else held constant.A) increases; lowersB) lowers; increasesC) does not change; greatly increasesD) moderately lowers; does not changeAnswer: AAACSB: Reflective Thinking20) As default risk increases, the expected return on corporate bonds ________, and the return becomes ________ uncertain, everything else held constant.A) increases; lessB) increases; moreC) decreases; lessD) decreases; moreAnswer: DAACSB: Reflective Thinking21) As default risk decreases, the expected return on corporate bonds ________, and the return becomes ________ uncertain, everything else held constant.A) increases; lessB) increases; moreC) decreases; lessD) decreases; moreAnswer: AAACSB: Reflective Thinking22) As their relative riskiness ________, the expected return on corporate bonds ________ relative to the expected return on default-free bonds, everything else held constant.A) increases; increasesB) increases; decreasesC) decreases; decreasesD) decreases; does not changeAnswer: BAACSB: Reflective Thinking23) Which of the following statements are TRUE?A) A decrease in default risk on corporate bonds lowers the demand for these bonds, but increases the demand for default-free bonds.B) The expected return on corporate bonds decreases as default risk increases.C) A corporate bond's return becomes less uncertain as default risk increases.D) As their relative riskiness increases, the expected return on corporate bonds increases relative to the expected return on default-free bonds.Answer: BAACSB: Reflective Thinking24) Everything else held constant, if the federal government were to guarantee today that it will pay creditors if a corporation goes bankrupt in the future, the interest rate on corporate bonds will ________ and the interest rate on Treasury securities will ________.A) increase; increaseB) increase; decreaseC) decrease; increaseD) decrease; decreaseAnswer: CAACSB: Reflective Thinking25) Bonds with relatively high risk of default are calledA) Brady bonds.B) junk bonds.C) zero coupon bonds.D) investment grade bonds.Answer: BAACSB: Analytical Thinking26) Junk bonds, bonds with a low bond rating, are also known asA) high-yield bonds.B) investment grade bonds.C) high quality bonds.D) zero-coupon bonds.Answer: AAACSB: Application of Knowledge27) Bonds with relatively low risk of default are called ________ securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called ________.A) investment grade; lower gradeB) investment grade; junk bondsC) high quality; lower gradeD) high quality; junk bondsAnswer: BAACSB: Analytical Thinking28) Which of the following bonds would have the highest default risk?A) municipal bondsB) investment-grade bondsC) U.S. Treasury bondsD) junk bondsAnswer: DAACSB: Reflective Thinking29) Which of the following long-term bonds has the highest interest rate?A) corporate Baa bondsB) U.S. Treasury bondsC) corporate Aaa bondsD) municipal bondsAnswer: AAACSB: Reflective Thinking30) Which of the following securities has the lowest interest rate?A) junk bondsB) U.S. Treasury bondsC) investment-grade bondsD) corporate Baa bondsAnswer: BAACSB: Reflective Thinking31) The spread between interest rates on low quality corporate bonds and U.S. government bondsA) widened significantly during the Great Depression.B) narrowed significantly during the Great Depression.C) narrowed moderately during the Great Depression.D) did not change during the Great Depression.Answer: AAACSB: Reflective Thinking32) During the Great Depression years 1930-1933 there was a very high rate of business failures and defaults, we would expect the risk premium for ________ bonds to be very high.A) U.S. TreasuryB) corporate AaaC) municipalD) corporate BaaAnswer: DAACSB: Reflective Thinking33) Risk premiums on corporate bonds tend to ________ during business cycle expansions and ________ during recessions, everything else held constant.A) increase; increaseB) increase; decreaseC) decrease; increaseD) decrease; decreaseAnswer: CAACSB: Reflective Thinking34) The collapse of the subprime mortgage marketA) did not affect the corporate bond market.B) increased the perceived riskiness of Treasury securities.C) reduced the Baa-Aaa spread.D) increased the Baa-Aaa spread.Answer: DAACSB: Reflective Thinking35) The collapse of the subprime mortgage market increased the spread between Baa and default-free U.S. Treasury bonds. This is due toA) a reduction in risk.B) a reduction in maturity.C) a flight to quality.D) a flight to liquidity.Answer: CAACSB: Analytical Thinking36) During a "flight to quality"A) the spread between Treasury bonds and Baa bonds increases.B) the spread between Treasury bonds and Baa bonds decreases.C) the spread between Treasury bonds and Baa bonds is not affected.D) the change in the spread between Treasury bonds and Baa bonds cannot be predicted. Answer: AAACSB: Reflective Thinking37) If you have a very low tolerance for risk, which of the following bonds would you be least likely to hold in your portfolio?A) a U.S. Treasury bondB) a municipal bondC) a corporate bond with a rating of AaaD) a corporate bond with a rating of BaaAnswer: DAACSB: Reflective Thinking38) Which of the following statements is TRUE?A) A liquid asset is one that can be quickly and cheaply converted into cash.B) The demand for a bond declines when it becomes less liquid, decreasing the interest rate spread between it and relatively more liquid bonds.C) The differences in bond interest rates reflect differences in default risk only.D) The corporate bond market is the most liquid bond market.Answer: AAACSB: Reflective Thinking39) Corporate bonds are not as liquid as government bonds becauseA) fewer corporate bonds for any one corporation are traded, making them more costly to sell.B) the corporate bond rating must be calculated each time they are traded.C) corporate bonds are not callable.D) corporate bonds cannot be resold.Answer: AAACSB: Reflective Thinking40) When the Treasury bond market becomes more liquid, other things equal, the demand curve for corporate bonds shifts to the ________ and the demand curve for Treasury bonds shifts to the ________.A) right; rightB) right; leftC) left; rightD) left; leftAnswer: CAACSB: Reflective Thinking41) When the Treasury bond market becomes less liquid, other things equal, the demand curve for corporate bonds shifts to the ________ and the demand curve for Treasury bonds shifts to the ________.A) right; rightB) right; leftC) left; rightD) left; leftAnswer: BAACSB: Reflective Thinking42) A decrease in the liquidity of corporate bonds, other things being equal, shifts the demand curve for corporate bonds to the ________ and the demand curve for Treasury bonds shifts to the ________.A) right; rightB) right; leftC) left; leftD) left; rightAnswer: DAACSB: Reflective Thinking43) An increase in the liquidity of corporate bonds, other things being equal, shifts the demand curve for corporate bonds to the ________ and the demand curve for Treasury bonds shifts to the ________.A) right; rightB) right; leftC) left; leftD) left; rightAnswer: BAACSB: Reflective Thinking44) A(n) ________ in the liquidity of corporate bonds will ________ the price of corporate。