You go to the Wall Street Journal and notice that yields on almost all corporate and Treasury bonds have decreased. The yield decreases may be explained by which one of the following?
A)A decrease in U.S. inflationary expectations
B)Newly expected decline in the value of the dollar
C)An increase in current and expected future returns of real corporate investments
D)Decreased Japanese purchases of U.S. Treasury bills/bonds
E)Increases in the U.S. government budget deficit

Question

Quizplus · Accepted Answer

Yield decreases in both corporate and Treasury bonds are typically caused by a decrease in U.S. inflationary expectations. This would lower the expected yield necessary to compensate investors for inflation risk.

You Go to the Wall Street Journal and Notice That