Which of the following statements is true?
A) The largest investors in corporate bonds are institutional investors such as life insurance companies and pension funds.
B) The market for corporate bonds is thin compared to the market for corporate stocks.
C) Prices in the corporate bond market tend to be more volatile than prices of securities sold in markets with greater trading volumes.
D) All of the above are true.

Question

Quizplus · Accepted Answer

All of the statements are true. Institutional investors like life insurance companies and pension funds are indeed the largest investors in corporate bonds due to their need for stable, long-term investments. The market for corporate bonds is generally less liquid (or "thinner") than that for corporate stocks, leading to less frequent trading and potentially wider spreads between buy and sell prices. This relative illiquidity, along with other factors, can contribute to greater price volatility in the corporate bond market compared to more actively traded securities.

Which of the Following Statements Is True