Everything Else Held Constant,when Bonds Become Less Widely Traded,and as a Consequence

question 164

Multiple Choice

Everything else held constant,when bonds become less widely traded,and as a consequence the market becomes less liquid,the demand curve for bonds shifts to the ________ and the interest rate ________.

• A)right;rises
• B)right;falls
• C)left;falls
• D)left;rises

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Definitions:

Capital Allocation Line

A graph line that represents all possible combinations of risk-free and risky assets for an investor.

Mean Standard Deviation Graph

A graphical representation that shows the variability of a dataset around its mean value, often used in statistics.

Expected Return

Expected return is the weighted average of the probable returns of an investment, accounting for all possible scenarios.

Risky Asset

An asset that carries a significant chance of losing part or all of its investment value.