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

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a particular date, reporting assets, liabilities, and equity.

Total Assets

The sum of all resources owned by a company, valued in monetary terms.

Total Liabilities

The sum of all financial obligations or debts that a company owes to external parties.

Accounting Profession

The field involving the measurement, processing, and communication of financial information about economic entities.