Under Which Conditions Will an Investor Demand a Larger Return

question 74

Multiple Choice

Under which conditions will an investor demand a larger return (yield) on a bond?

• A)The bond issue is upgraded from A to AA.
• B)The bond issue is downgraded from A to BBB.
• C)Interest rates decrease due to decline in inflation.
• D)None of these conditions will cause an increase in the bond's yield.

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Definitions:

Knock-Out Rule

A principle in contract law that resolves conflicts in standard form contracts (often in international trade) by nullifying conflicting terms and substituting them with terms of a neutral nature.

Gap-Filling

Refers to the method used by courts or parties to resolve ambiguities or omissions in contracts, often by applying standard provisions or reasonable interpretations.

Presumptions

Beliefs or assumptions accepted as true on the basis of probabilities without direct evidence or proof.

Mailbox Rule

A legal principle that an offer is considered accepted once the acceptance is dispatched by the offeree, not when it is received by the offeror.