You hold an extended-title bond producing 10 percent 68. If interest rates fall shortly before you sell the bond, you will sell at a higher price than if interest rates had been constant. Real 70. The total required real rate of return is equal to the real rate of return plus the inflation premium. Incorrect 74. The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium. Genuine 75. Business risk relates to the inability of the firm to meet its debt obligations as they come due. Incorrect 76....Read More
