An Increase in Interest Rates Will Increase the Future Value

question 123

Multiple Choice

An increase in interest rates will increase the future value of a portfolio because the cash flows produced by the portfolio:

• A) will increase the maturity value of the bond.
• B) can be reinvested at higher rates of return.
• C) can be used to recall high-rate bonds.
• D) will generate cash to pay future coupon interest.
• E) will decrease the yield to maturity of the bond.

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