Which of the Following Statements Is CORRECT

question 50

Multiple Choice

Which of the following statements is CORRECT?

• A) The total yield on a bond is derived from dividends plus changes in the price of the bond.
• B) Bonds are riskier than common stocks and therefore have higher required returns.
• C) Bonds issued by larger companies always have lower yields to maturity (less risk) than bonds issued by smaller companies.
• D) The market value of a bond will always approach its par value as its maturity date approaches, provided the bond's required return remains constant.
• E) If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices.

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Definitions:

Statement Form

An expression using statement variables and connectives to state the logical form of an actual or possible statement.

Conditional

Involving or implying a condition in logic or mathematics, often expressed in "if... then..." statements that assert the dependency of one event or outcome on another.

Tautology

In logic, a statement that is true in every possible interpretation or a redundant expression that doesn't add informational value.

Disjunct

A component of a disjunction in logic, where the truth of any disjunct is sufficient for the truth of the disjunction.