The Relationship Between a Bond's Price and the Yield to Maturity

question 43

Multiple Choice

The relationship between a bond's price and the yield to maturity

• A)changes at a constant level for each percentage change of yield to maturity.
• B)is an inverse relationship.
• C)is a linear relationship.
• D)changes at a constant level for each percentage change of yield to maturity and is an inverse relationship.

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Definitions:

Producer Surplus

The difference between the price at which producers are willing to sell a good and the actual market price they receive.

Quantity Supplied

The amount of a certain good or service that producers are willing and able to provide at a specific price.

Quantity Demanded

Refers to the total amount of a good or service that consumers want to buy at a specific price level in a given period.

Wealth-Reducing Activities

Activities that diminish the value of assets or the net worth of individuals or entities.