Question: 1. Everything else held constant, if the expected return on GE stock rises from 8.75 to 10 percent and the expected return on U.S. Treasury

1. Everything else held constant, if the expected return on GE stock rises from 8.75 to 10 percent and the expected return on U.S. Treasury bonds rises from 6 to 7 percent, then the expected return of holding GE stock ________ relative to U.S. Treasury bonds and the demand for U.S. Treasury bonds ________.

A. Rises, Rises

B. Rises, Falls

C. Falls, Rises

D. Falls, Falls

2. Everything else held constant, if the expected return on Verizon stock falls from 8 to 7 percent and the yield to maturity on 20-year U.S. Treasury bonds falls from 3.45 to 2.55 percent, then the expected return of holding Verizon stock ________ relative to U.S. Treasury bonds and the demand for U.S. Treasury bonds ________.

A. Rises, Rises

B. Rises, Falls

C. Falls, Rises

D. Falls, Falls

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