Which of the following is true if investors expect greater future profits from a company?
A)The demand for the company's bonds decreases.
B)The price of the company's bonds decreases.
C)The current yield on the company's bonds decreases.
D)The par value of the company's bonds decreases.

Question

Quizplus · Accepted Answer

When investors expect greater future profits from a company, the demand for the company's bonds typically increases, leading to a rise in bond prices. As bond prices increase, the current yield (annual interest payment divided by the current market price) decreases because the interest payment remains fixed.

Which of the Following Is True If Investors Expect Greater