What actions by bond investors, given their expectations of increasing interest rates, result in an upward sloping yield curve?
A) selling long-term securities and buying short-term securities.
B) buying long-term securities and selling short-term securities.
C) selling short-term securities and holding cash.
D) selling long-term securities and holding cash.

Question

Quizplus · Accepted Answer

When bond investors expect interest rates to rise, they sell long-term securities to avoid price declines and buy short-term securities to reinvest at higher rates sooner, resulting in an upward sloping yield curve.

What Actions by Bond Investors, Given Their Expectations of Increasing