Question: If an investor expect interest rate to decrease in the near term, should the investor invest in bonds with longer terms to maturity or bonds

If an investor expect interest rate to decrease in the near term, should the investor invest in bonds with longer terms to maturity or bonds with shorter terms to maturity?

Step by Step Solution

★★★★★

3.36 Rating (149 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

When expecting interest rates to decrease an investor should invest in bonds with longer terms to ma... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...

Assess whether each choice is correct or not. If incorrect, explain what makes it incorrect and suggest a correct statemet. 1. Under the Pure Expectations Theory, if these investors believe that...

If an investor expect interest rate to decrease in the near term, should the investor invest in bonds with longer terms to maturity or bonds with shorter terms to maturity?

Question 1 Which of the following would lead to an increase in the Demand for Bonds? Firms expect a recession in the near future Investors are very willing to defer their spending Investors are older...

Required: Circle the correct answer for each question Which elements of bonds are pre printed on the bond certificate and therefore are non Stated Interest rate, face value payment terms maturity...

Need to complete 10 homework but now i need 5 homework then after some time 5 homework more. Here it is attachment. Chapter 5 HW Questions [ALL OF THESE MUST BE DONE IN EXCEL] 1. Future value: Chuck...

i puod ner promised vi ed at a 6.159, rity. 8. An investor is more likely to exercise a put option on a bond when A) interest rates are expected to increase. B) interest rates are expected to...

2020. 4. 27. Preliminary Pricing Supplement 424B2 1 d109258d424b2.htm PRELIMINARY PRICING SUPPLEMENT The information in this preliminary pricing supplement is not complete and may be changed. This...

Multiple-choice questions. Choose the best answer in each question. Answer all questions in this section. One mark for each question. Provide your answers in the table at the end of this section....

Listed below are some items found in the financial statements of Alex Greenspan Co. Indicate in which financial statement(s) the following items would appear. (a) Service revenue. (b) Equipment. (c)...

You are required to choose a company that is struggling and act as a consultant. Based on your course material, you have to set a plan for managers to follow making sure that the company is properly...

Analyze the cost differences and explain which provides better information for managerial decisions

Design a study to examine the following situation. An organization would like to introduce one of two types of new manufacturing processes to increase the productivity of workers, and both involve...

Differentiate between a proprietary and a voluntary hospital.

More energy is needed to remove an electron from a hydrogen molecule than from a hydrogen atom. Why do you think this is so?

The property of a fluid called viscosity is related to its internal friction and resistance to being deformed. The viscosity of water, for instance, is less than that of molasses and honey, just as...

A mass weighing 10 pounds stretches a spring 1/3 foot. This mass is removed and replaced with a mass of 1.6 slugs, which is initially released from a point 1/3 foot above the equilibrium position...

What accounts are involved in the books of the hire purchaser in a hire purchase agreement? ' a. Hire purchase account and bank account ' b. Purchase account and sales account ' c. Sales ledger and...

In the text, we discussed the Matching Pennies game and illustrated that such a game only has a mixed strategy equilibrium. A: Consider each of the following and explain (unless you are asked to do...

Where I live, most people do not have swimming pools despite the fact that it gets very hot in the summers. Thus, families, especially those with children, try to find swimming pools in the area. Our...

The U.S. tax code subsidizes housing through a deduction of mortgage interest. For new homeowners, mortgage interest makes up the bulk of their housing payments which tend to make up about 25% of a...

13. How can a Hebbian synapse account for the basic phenomena of classical conditioning?

6. A child born without a corpus callosum can name something felt with the left hand, but an adult who suffered damage to the corpus callosum cannot. What are two likely explanations?

When a person born without a corpus callosum moves the fingers of one hand, he or she also is likely to move the fingers of the other hand involuntarily. What possible explanation can you suggest?