estion Completion Status: QUESTION 5 Which of the following statements is CORRECT? If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices. The total yield on a bond is derived from dividends plus changes in the price of the bond. Bonds are generally regarded as being riskier than common stocks, and therefore bonds have higher required returns Bonds issued by larger companies always have lower yields to maturity due to less risk) than bonds issued by smaller companies The market price of a bond will always approach its par value as its maturity date approaches, provided the bond's required return remains constant QUESTION 6 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save Allar 0 BI e 99 DOLL inses 3 Priser F11 FO FU A & * W # AtA % 5 LO 7 00 E RT Y U J Question Completion Status: QUESTION 6 4 Which of the following statements is CORRECT? An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks. The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio It is impossible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock. Once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount. An investor can eliminate virtually all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks. QUESTION 7 4 noir Click Save and Submit to save and submit. Click Save All Answers to see all answers Save All Answers O e 99 Priser Wer 12 F FE $ % A & 3 4 5 6 B P. E RT D F G H J K Question Completion Status: The distributions of rates of return for Companies XA and YB are given below: State of the Probability of This State Economy Occurring Boom Normal 0.6 Recession 0.2 0.2 30% - 10% 10% 5% -5% 50% We can conclude from the above information that any rational, risk-averse investor would be better off adding Security XA to a well-diversified portfolio over Security XB. Why is this statement TRUE or FALSE?. Explain! Arial 3 (12pt) T E- i 33 Click Save and Submit to save and submit. Click Save All Answers to see all ans, Save All Answers o RI e E 99+ DELL Priser 12 & * # 9 3 4 5 7 B 6 P. E R T K L DF F G HJ