Which of the Following Statements Is CORRECT

question 2

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 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.

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Definitions:

Deductive Sequence

A logical structure in communication where the conclusion is presented first, followed by supporting evidence.

Bonus Scheme

A systematic approach to provide additional compensation to employees beyond their usual salary, often tied to performance or company profits.

Persuasive Claims

Statements designed to convince or influence others towards a particular viewpoint or course of action.

Guarantees

Promises or assurances, typically in writing, that certain conditions will be fulfilled, especially concerning the quality or durability of an item.