Everything Else Held Constant,if the Expected Return on Bonds Falls

question 40

Multiple Choice

Everything else held constant,if the expected return on bonds falls from 8 to 7 percent and the expected return on corporate bonds falls from 10 to 8 percent,then the expected return of corporate bonds ________ relative to bonds and the demand for corporate bonds ________.

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

---

Definitions:

Total Cost

The sum of all expenses involved in producing a good or delivering a service, including fixed and variable costs.

Contribution Margin

The gap between sales income and variable expenses, demonstrating the extent to which income aids in covering constant costs and producing earnings.

Average Costs

The cost per unit of output on average, calculated by dividing total costs by the total quantity of output.

Selling Price

Selling price is the amount of money a buyer pays to purchase a product or service from a seller.