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For all the questions below select the appropriate answer: a) If portfolio managers and private individuals expect market interest rates will fall in the near

For all the questions below select the appropriate answer:

a)If portfolio managers and private individuals expect market interest rates will fall in the near future they will:

  1. congratulate themselves on their wisdom in currently holding bonds in their portfolios.
  2. move quickly to buy bonds and shift portfolios from money to bonds before interest rates fall.
  3. move quickly and sell bonds to shift portfolios from bonds to money before interest rates fall.
  4. do nothing because the coupon payments and yields on bonds they hold will not change with a change in current market interest rates.

b)

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