Question: True/False/Uncertain Please explain your reasoning-just a sentence or two are fine. 1)All else equal, when the Fed cuts interest rates, bonds with shorter maturity should

True/False/Uncertain

Please explain your reasoning-just a sentence or two are fine.

1)All else equal, when the Fed cuts interest rates, bonds with shorter maturity should increase by more in value.

2)Assume that two bonds, A and B, are similar in all respects but A has more convexity than B. If interest rates are very volatile, bond A is a more attractive investment.

3)The Fed issues a statement there will be large economic fluctuations in the coming months due to the difficulty in accurately estimating the impact of the coronavirus. You expect that option prices should increase as a result of this news.

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