Everything Else Held Constant, If the Expected Return on Bonds

question 107

Multiple Choice

Everything else held constant, if the expected return on bonds falls from 10 to 5 percent and the expected return on GE stock rises from 7 to 8 percent, then the expected return of holding GE stock ________ relative to bonds and the demand for GE stock ________.

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

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