Which of the Following Statements Is CORRECT

question 50

Multiple Choice

Which of the following statements is CORRECT?

• A) The total yield on a bond is derived from dividends plus changes in the price of the bond.
• B) Bonds are riskier than common stocks and therefore have higher required returns.
• C) Bonds issued by larger companies always have lower yields to maturity (less risk) than bonds issued by smaller companies.
• D) 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.
• E) If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices.

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Definitions:

Milling Machine Time

The time required for a milling machine to complete a piece of work, often considered in manufacturing cost calculations.

Demand Satisfaction

The fulfillment of consumer desires and needs through the provision of products or services.

Production Facility

A site or plant where goods are produced or manufactured, equipped with specialized equipment for production activities.

Idle Capacity

Unused production capability, where available resources such as machinery or labor are not fully utilized.