When the Expected Inflation Rate Decreases,the Demand for Bonds ________,The

question 102

Multiple Choice

When the expected inflation rate decreases,the demand for bonds ________,the supply of bonds ________,and the interest rate ________.

• A) increases; increases; rises
• B) decreases; decreases; falls
• C) increases; decreases; falls
• D) decreases; increases; rises

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Definitions:

Relative Value Strategy

An investment strategy that seeks to identify and exploit differences in the prices of related financial instruments, such as stocks and bonds, for potential profit.

Net IRR

The Net Internal Rate of Return, a method used in capital budgeting to estimate the profitability of potential investments, considering net cash flows.

Investors

Persons or organizations that invest funds hoping to gain financial profits.

AUM

The cumulative market value of all investments managed by an individual or organization for its clients.