Everything Else Held Constant,if the Expected Return on U

question 74

Multiple Choice

Everything else held constant,if the expected return on U.S. Treasury bonds falls from 8 to 7 percent and the expected return on corporate bonds falls from 10 to 8 percent,then the expected return of corporate bonds ________ relative to U.S. Treasury bonds and the demand for corporate bonds ________.

• A)rises;rises
• B)rises;falls
• C)falls;rises
• D)falls;falls

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Definitions:

Capital Formation

The process of building up the physical and financial assets of an economy for the production of goods and services.

Manufacturing

The process of converting raw materials, components, or parts into finished goods that meet a customer's expectations or specifications.

Services

Intangible products such as accounting, banking, cleaning, consultancy, education, insurance, expertise, medical treatment, or transportation.

Brain Drain

Refers to the emigration of highly skilled or qualified people from a particular country or region to another, often for better pay or conditions.