An Increase in Either the Risk-Free Rate or the General

question 50

True/False

An increase in either the risk-free rate or the general level of the risk premium on bonds results in a higher required rate of return and therefore causes bond prices to increase. ​

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Definitions:

Positive Alphas

Investments that have performed better than their benchmark indices, indicating they have generated excess returns adjusted for risk.

Betas

A measure of a stock's volatility in relation to the overall market, indicating its risk compared to the market average.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, commonly considered the yield of government bonds like T-bills.

Expected Market Rate

The average rate of return anticipated by market participants, based on forecasts and historical trends.