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You expect interest rates to increase further in the future while the bond market has not factored in such possibility. Which one of the following
You expect interest rates to increase further in the future while the bond market has not factored in such possibility. Which one of the following bonds should you purchase now to maximize your gains or minimize your losses if the further rate increase does occur?
A) Short-term; low coupon
B) Short-term; high coupon
C) Long-term; zero coupon
D) Long-term; low coupon
E) Long-term; high coupon
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