When Ignoring Exchange Rate Risk, Bond Yields

question 20

Multiple Choice

When ignoring exchange rate risk, bond yields:

• A) are the same for all currencies.
• B) are consistently higher for all non-UK bonds than UK bonds.
• C) are consistently lower for all non-UK bonds than UK bonds.
• D) none of the above.

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Definitions:

Price-Elastic

Describing a situation where the demand for a product significantly changes in response to changes in its price.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded by consumers, normally downward sloping.

Revenue

The income that a business receives from its normal business activities, usually from the sale of goods and services to customers.

Price Elasticity

An indicator of the degree to which demand for a product is affected by variations in its price, reflecting consumer sensitivity to price fluctuations.