For all the questions below select the appropriate answer: a) If portfolio managers and private individuals expect
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Question:
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:
- congratulate themselves on their wisdom in currently holding bonds in their portfolios.
- move quickly to buy bonds and shift portfolios from money to bonds before interest rates fall.
- move quickly and sell bonds to shift portfolios from bonds to money before interest rates fall.
- 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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