An unexpected rise in GDP growth should send bond prices __________ and stock prices __________.
A) up; up
B) up; down
C) down; up
D) down; down

Question

Quizplus · Accepted Answer

An unexpected rise in GDP growth is generally positive for stocks, as it suggests a stronger economy and potentially higher corporate earnings, leading to an increase in stock prices. However, it may lead to higher interest rates as the central bank aims to control inflation, which negatively affects bond prices since bond yields move inversely to their prices.

An Unexpected Rise in GDP Growth Should Send Bond Prices