Holding all else constant, when interest rates fall,
(a) yields on common stocks rise above yields on bonds.
(b) yields on common stocks fall below yields on bonds.
(c) yields on common stocks and bonds rise at an equal rate.
(d) yields on common stocks and bonds fall at an equal rate.
(a)
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A reverse repurchase agreement will accomplish all of the following to banks and other financial intermediaries EXCEPT:
A. discourage investment elsewhere. B. ensure their solvency. C. give them a higher rate of return on T-Bill holdings. D. drain them of liquid cash.
A firm has an incentive to decrease supply now and increase supply in the future if it expects that
A) the price of its product will be lower in the future than it is today. B) more firms will enter the market in the future. C) the price of its product will be higher in the future than it is today. D) the prices of inputs used to produce the product will rise in the future.