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Complete the following sentences with the correct items. If an investor was aware that interest rates were about to drop dramatically, he would prefer a
Complete the following sentences with the correct items. If an investor was aware that interest rates were about to drop dramatically, he would prefer a bond with a maturity and a coupon rate as these would result in larger price appreciations of the purchased bonds. Hint: Consider the impact on a bond's price holding all else constant besides maturity; and additionally consider the impact on a bond's price holding all else constant besides a bond's coupon rate. (a) shorter; higher (b) shorter; lower (c) longer; higher (d) longer; lower
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