Suppose the U.S. Treasury announces plans to issue $50 billion of new bonds. Assuming the announcement was not expected, what effect, other things held constant, would that have on bond prices and interest rates?

a. Prices and interest rates would both rise.

b. Prices and interest rates would both decline.

c. There would be no changes in either prices or interest rates.

d. Prices would rise and interest rates would decline.

e. Prices would decline and interest rates would rise.

Answer rating: 100% (QA)

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