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Which of the following statements is CORRECT?

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Question

17. Which of the following statements is CORRECT?;a. If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices.;b. The total yield on a bond is derived from dividends plus changes in the price of the bond.;c. Bonds are riskier than common stocks and therefore have higher required returns.;d. Bonds issued by larger companies always have lower yields to maturity (less risk) than bonds issued by smaller companies.;e. The market value of a bond will always approach its par value as its maturity date approaches, provided the bond?s required return remains constant.

 

Paper#31777 | Written in 18-Jul-2015

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