Chapter 9, Problem 3TY

Please, I need help with number 1, 2, 3, 4 1. Assume that there are two assets in the world, stocks and bonds.  If both sell at the same price, and if stocks are twice as risky as bonds, we should expect that the a. Stocks will not sell. b. Rate of return on stocks will be twice the rate of return on bonds c. Rate of return on bonds will be twice the rate of return on stocks d. Rate of return on bonds will be higher than stocks, by an indeterminate amount 2. Which of the following describes the relationship between stock and bond prices and interest rates? a. There is a direct and positive relationship between the rate of interest and stock and bond prices.  (As interest go up, stock and bond prices rise as well.) b. The relationship is far too difficult to quantify. c. There is an inverse relationship between interest rates and the price of a stock or a bond.  (As interest rates go up, stock and bond prices decline.) d. It varies with the performance of the stock or bond market. 3.…

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