Suppose two investors (A and B) are thinking about purchasing the same longterm bond. When deciding what
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Suppose two investors (A and B) are thinking about purchasing the same longterm bond. When deciding what price he would be willing to pay for the bond, investor A takes into account the behavior of interest rates over the previous 10 years, noting a period of interest-rate volatility before the low and stable interest rates of the most recent two years. Investor B only looks at the past two years when making his decision. Everything else being equal, which investor do you think would be willing to pay a higher price for the bond?
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Related Book For
Money Banking And Financial Markets
ISBN: 9780073375908
3rd Edition
Authors: Stephen Cecchetti, Kermit Schoenholtz
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