Which of the Following Statements Is CORRECT

question 57

Multiple Choice

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 generally regarded as being riskier than common stocks,and therefore bonds have higher required returns.
• D) Bonds issued by larger companies always have lower yields to maturity (due to less risk)than bonds issued by smaller companies.
• E) The market price of a bond will always approach its par value as its maturity date approaches,provided the bond's required return remains constant.

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Definitions:

Sampling Distribution

The arrangement of probabilities for a specified statistic, coming from a randomly chosen sample.

Sample Proportion

The fraction of the total sample that represents a particular trait or characteristic.

Normal Distribution

A probability distribution that is symmetric around the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Sample Size

The number of individual observations or elements taken from a population to form a sample for the purpose of statistical analysis.