If an Investor Thinks Interest Rates Are Likely to Rise

question 43

Multiple Choice

If an investor thinks interest rates are likely to rise, she would:

• A)Sell her bonds and hold more money
• B)Buy more bonds now and hold less money
• C)Not alter her bond portfolio until interest rates actually rise
• D)Not change her money holdings at all

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Definitions:

Consistency Motive

The inherent desire or drive within individuals to maintain uniformity and coherence among their beliefs, attitudes, and behaviors.

Self-Verification Motive

The drive to confirm one's self-concept by seeking out and interpreting information that aligns with one's existing beliefs about oneself.

Justification Motive

The psychological drive to rationalize one's actions, beliefs, or decisions, often to preserve self-esteem or avoid cognitive dissonance.

Appraisal Motive

The drive to understand oneself and others, assessing motivations, emotions, and behaviors for comprehension.