If investors expect interest rates to rise, they should sell preferred stock and buy bonds.

Name: If investors expect interest rates to rise, they should sell preferred stock and buy bonds.
Brand: Quizplus
Rating: 4.8 (51 reviews)

Question

Quizplus · Accepted Answer

Preferred stocks often behave like bonds, with fixed dividend payments, and can decrease in value when interest rates rise, similar to bonds. Selling preferred stocks and buying bonds would not necessarily be advantageous if interest rates are expected to rise, as both asset types can be negatively impacted.

If Investors Expect Interest Rates to Rise, They Should Sell