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If the Prevailing Interest Rate Is Greater Than the Equilibrium

Question 60

Multiple Choice

If the prevailing interest rate is greater than the equilibrium rate, then:


A) portfolio managers will buy bonds and thus increase the liquidity of their portfolios.
B) portfolio managers will sell bonds and thus reduce the liquidity of their assets.
C) portfolio mangers will sell bonds and thus increase the liquidity of their assets.
D) portfolio managers will buy bonds and thus reduce the liquidity of their assets.

Correct Answer:

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