The Effect of a Change in the General Level of Interest

question 6

Multiple Choice

The effect of a change in the general level of interest rates on the capital values of traded fixed-interest securities is such that:

• A) a fall in the general level of interest rates will normally promote decreases in the capital values of traded fixed-interest securities.
• B) holders of these securities will enjoy an appreciation in capital values when the general level of interest rates falls.
• C) there is a positive relationship between the general level of interest rates and the capital values of traded fixed-interest securities.
• D) both a and c