If a bond’s rating declines, the interest rate demanded by investors, called the required return, also decreases.
- False
If bond's rating declines then it becomes less attractive. Thus, it is inversely proportional to interest rate
Thus, if a bond’s rating declines then required rate increases.
Thus, given statement is incorrect.
Question: If a bond’s rating declines, the interest rate demanded by investors, called the required return,...
An increase in inflation will cause a bond’s required return to rise. True False
What can you conclude regarding the relationship between bond’s rating and the rate of the return bondholders will receive if they hold the bonds until the maturity date (YTM)?
29) The rate of return required by investors in the market for owning a bond is called the: a) Coupon. b) Face value. c) Maturity d) Yield to maturity. e) Coupon rate.
questions 4-6
D Question 4 2.08 pts As the required rate of return of an investment decreases, the market price of the investment decreases. ○True O False D Question 5 2.08 pts Proper diversification generally results in the elimination of risk. O True ○ False 2.08 pts D Question 6 Total risk equals systematic (market) risk plus unsystematic (hirm-specific) risk. O True ○ False MacBook Air 名 F5 F7 8 9
true or false: the coupon rate on a bond measures the investors return on their investment.
Q - Which of the following is called the Federal Funds rate? a. The interest rate at which banks borrow money from the Fed. b. the interest rate at which one bank borrows money from another bank. c. the interest rate at which investors borrow money from banks. d. all of the above Q - Which of the following statement(s) is true? a. If the income increases, then money demand increases b. If the price level increases, then money demand...
For a standard semi-annual coupon bond, when price of the bond decreases, which of the following is true: The rate of return of the bond falls. The present value of the bond’s remaining cash flows declines. The coupon amount increases. The bond is called a premium bond. None of these.
Find the required rate of return for equity investors of a firm with a beta of 1.3 when the risk free rate is 5%, and the return on the market is 10%
If at some specific interest rate the quantity of money demanded is less than the quantity of money supplied, people will desire to buy interest-earning assets causing the interest rate to decrease. Select one: True False In recent years, the Fed has conducted policy by setting a target for the federal funds rate. Select one: True False A decrease in taxes is an expansionary fiscal policy designed to increase aggregate demand and reduce unemployment. Select one: True False If aggregate...
10. The real interest rate is the (x) real rate of return to the lender. (y) real cost of borrowing to the borrower. (z) nominal interest rate plus the rate of inflation. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (z) only 13. If there is a shortage of loanable funds, then A. neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity...