Which of the Following Statements Is True Regarding Investments in Bonds

question 54

Multiple Choice

Which of the following statements is true regarding investments in bonds?

• A) Shorter maturity bonds generally return more than longer maturity bonds.
• B) Treasury bonds generally return more than corporate bonds of the same maturity.
• C) Longer maturity bonds generally return more than shorter maturity bonds.
• D) Higher-rated bonds generally return more than lower-rated bonds.

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Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when the free market equilibrium for a good or a service is not achieved.

Under Production

A situation where less is produced than could be achieved with the available resources, often leading to inefficiencies and unmet demand.

Consumer Surplus

The gap between the price consumers are prepared to pay for a product or service and the actual amount they spend on it.

Market Price

The market rate for buying or selling an asset or service in a public trading environment.