An Increase in the Expected Return on Bonds Causes the _____

question 57

Multiple Choice

An increase in the expected return on bonds causes the _____ bonds to shift and for equilibrium interest rates to

• A) demand for, rise.
• B) demand for, fall.
• C) supply of, rise.
• D) supply of, fall.

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Definitions:

Expected Market Rate

The anticipated rate of return that investors predict to receive from the market as a whole over a specific period.

Myopic Behavior

Short-sighted decision-making focusing on immediate benefits rather than considering long-term consequences, often seen in investment choices.

Mean-variance Optimizers

A mathematical process used in finance to construct an investment portfolio that aims to maximize returns for a given level of risk.

Portfolio Beta

A measure of the volatility, or systematic risk, of a portfolio of investments in comparison to the market as a whole.