If Issuers of Securities (Borrowers) and Investors Suddenly Expect Interest

question 29

Multiple Choice

If issuers of securities (borrowers) and investors suddenly expect interest rates to decrease, their actions to benefit from their expectations should cause

• A) long-term yields to rise.
• B) short-term yields to decrease.
• C) prices of long-term securities to decrease.
• D) A and B
• E) none of the above