An attempt to relate bond yields from 1968-1991 to the Standard and Poor's 500 found
A) no relationship.
B) investment grade bonds had the largest beta.
C) bond yields were more volatile than stock yields.
D) lowest rated bonds had the largest beta.

Question

Quizplus · Accepted Answer

The correct answer is that the lowest rated bonds had the largest beta. Beta measures the volatility of an investment compared to the market as a whole. Lower-rated bonds, being riskier, tend to have higher betas because their prices are more sensitive to changes in the market, leading to greater volatility in their yields compared to higher-rated bonds or the broader stock market.

An Attempt to Relate Bond Yields from 1968-1991 to the Standard