Holding the Expected Return on Bonds Constant,an Increase in the Expected

question 148

Multiple Choice

Holding the expected return on bonds constant,an increase in the expected return on common stocks would ________ the demand for bonds,shifting the demand curve to the ________.

• A)decrease;left
• B)decrease;right
• C)increase;left
• D)increase;right

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Definitions:

Market Risk Premium

The additional financial gain an investor looks to achieve by preferring a risk-laden market portfolio over risk-free investment options.

Expected Rate Of Return

The anticipated amount of profit or loss an investment is projected to generate based on historical or estimated future performance data.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual values in a data set differ from the mean.