12. You are the owner of a 10 year treasury bond that has 5 years left until it matures. You

hear on the radio that the Fed raised the federal funds rate by 1 percentage point from

2% to 3% overnight. What do you think will happen to the price of the bond in the bond

market?

a. Nothing this is a long term bond and it is un-affected by a short term interest rate like

the federal funds rate

b. Not enough information

c. The price of the bond will rise

d. The price of the bond will fall