Question
Why is the relationship between price and yield negative? a. Because investors reward higher cash-flows with a lower price. b. Because governments regulation prohibits a
Why is the relationship between price and yield negative?
a. Because investors reward higher cash-flows with a lower price.
b. Because governments regulation prohibits a positive relationship.
c. Because an increase in the yield discounts cash flows at a higher rate and so their net present value decreases.
d. Because cash flows are variable over a bond’s life.
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Option D is correct Explanation Bond price and bond yield are inversely related As the ...Get Instant Access to Expert-Tailored Solutions
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Statistics For Business Decision Making And Analysis
Authors: Robert Stine, Dean Foster
2nd Edition
978-0321836519, 321836510, 978-0321890269
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