If fluctuations in interest rates become smaller,then,other things equal,the demand for stocks ________ and the demand for long-term bonds ________.
A)increases;increases
B)increases;decreases
C)decreases;decreases
D)decreases;increases

Question

Quizplus · Accepted Answer

When fluctuations in interest rates become smaller, the demand for long-term bonds increases because investors are less worried about interest rate risk. On the other hand, the demand for stocks decreases as investors seek less risky investments.

If Fluctuations in Interest Rates Become Smaller,then,other Things Equal,the Demand