Which of the Following Statements Is TRUE

question 58

Multiple Choice

Which of the following statements is TRUE?

• A) The more liquid the bond, the lower the yield.
• B) Tax-free bonds normally have a higher interest rate than other types of bonds.
• C) The price of a bond increases as it becomes more risky.
• D) The yield curve illustrates the relative default risks of alternative types of bonds.

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Definitions:

Selfish Motives

The driving force behind actions that prioritize personal gain over the welfare of others.

Personal Costs

Expenses borne directly by an individual, including out-of-pocket payments and the opportunity costs of alternative actions.

Economic Activity

All activities related to the creation, dissemination, and use of products and services in an economy.

Scarce Resources

Resources that are limited in supply and cannot meet all the demands placed on them by humans.