As a knowledgeable investor in 2007, you should have realized that as interest rates fell, bond prices would
A)also fall.
B)rise.
C)become more volatile, like stock prices.
D)fall but not by as much as stock prices.

Question

Quizplus · Accepted Answer

As interest rates fall, bond prices tend to rise. This is because existing bonds with higher interest rates become more valuable as newer bonds are issued with lower interest rates. So, as a knowledgeable investor in 2007, you should have realized that bond prices would rise as interest rates fell.

As a Knowledgeable Investor in 2007, You Should Have Realized