Increases in the basic cost of long-term funds or in risk will raise the required return on the bond.

Name: Increases in the basic cost of long-term funds or in risk will raise the required return on the bond.
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Question

Quizplus · Accepted Answer

When the basic cost of long-term funds or risk increases, investors require a higher return to compensate for the increased cost or risk. Therefore, the required return on a bond will also increase.

Increases in the Basic Cost of Long-Term Funds or in Risk