Factors That Decrease the Demand for Bonds Include

question 56

Multiple Choice

Factors that decrease the demand for bonds include

• A)an increase in the volatility of stock prices.
• B)a decrease in the expected returns on stocks.
• C)a decrease in the inflation rate.
• D)a decrease in the riskiness of stocks.

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Definitions:

Capital Markets

Financial markets where long-term debt or equity-backed securities are bought and sold, aiding in the raising of capital.

Derivatives

Financial contracts whose value is based on the performance of an underlying asset, index, or interest rate, used for hedging risks or speculating.

Financially Sound

A description of an entity's state when it has stable financial health, showing both short-term liquidity and long-term solvency.

Financially Distressed

The situation in which a company or individual cannot meet or has difficulty paying off financial obligations.