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    Stock and bond markets

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    Stock and bond markets:

    a. are independent of each other as to prevailing rates of return

    b. offer identical returns in order to compete for the investor's dollars

    c. would offer identical returns if the respective investments had identical terms to maturity

    d. offer higher returns that tend to move up and down together although equity returns are higher because stocks are riskier than bonds

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    Solution Preview

    Stock and bond markets:

    a. are independent of each other as to prevailing rates of return

    b. offer identical returns in order to compete for the investor's dollars

    c. would offer identical returns if the respective investments had identical terms to maturity

    d. offer higher returns that tend to move up and down together although equity returns are higher because stocks are riskier than bonds

    Answer: a

    Stock and bond markets are created by associations of brokers and dealers to trade in securities. Shares ...

    Solution Summary

    This solution is comprised of a detailed explanation to determine the difference in stock and bond markets.

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