Negative Yields to Maturity Imply That Bond Purchasers Are Better

question 14

Multiple Choice

Negative yields to maturity imply that bond purchasers are better off to hold cash. Acceptance of slightly negative yields by purchasers in recent times suggest that the

• A)convenience of storing large sums is also important to decisions.
• B)inflation rate is positive.
• C)governments have issued too many bonds.
• D)decision makers are only concerned with yields.

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Definitions:

Rate of Return

Rate of return refers to the profit or loss achieved from an investment during a specific time frame, represented as a percentage of the investment's original price.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage.

Principle

The original amount of money invested or loaned, before interest is added.

Graduate

A person who has successfully completed a course of study or training, especially one provided by a college or university.