Investors may choose to invest in bonds with a negative return if those investors are speculating on currency appreciation.

Question

Quizplus · Accepted Answer

If an investor believes that a foreign currency will appreciate against their home currency, they may choose to invest in bonds in that foreign currency even if they have a negative yield. This is because they expect the currency appreciation to offset the negative yield and provide a net positive return in their home currency.

Investors May Choose to Invest in Bonds with a Negative