All Else Being Equal, an Increase in the Yield to Maturity

question 1

Multiple Choice

All else being equal, an increase in the yield to maturity of a bond will result in:

• A)an increase in the market price of the bond.
• B)a greater interest rate price risk on a long-term bond than on a short-term bond.
• C)an increase in the maturity value of the bond.
• D)a decrease in the rate of return at which the cash flows from the portfolios can be reinvested.
• E)a lower risk of suffering losses in the market values of the bond portfolios.

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Definitions:

Demand Inelastic

Refers to a situation where the quantity demanded of a good or service does not change significantly when its price changes.

Farm Revenues

The total income generated from farming activities, including the sale of crops, livestock, and other farm products.

Price Elasticity

An index representing how the demand or supply of an item responds to price fluctuations.

Time Consumers

Activities or processes that require a significant amount of an individual's or organization's time.