Which of the Following Statements Is CORRECT

question 76

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:

Foreign Sovereign Immunities Act

A federal law in the United States that sets limits on the extent to which foreign nations and their related entities can be sued in U.S. courts.

Federal Court Jurisdiction

The authority granted to federal courts to hear and decide cases based on subject matter or parties involved.

Commercial Activity

Business operations or actions undertaken for the purpose of generating profit.

Expropriation

The act of a government taking privately owned property to be used for public purposes, usually with compensation to the owner.