If portfolio managers and private individuals expect market interest rates will rise in the near future, they will:

Question

Quizplus · Accepted Answer

When market interest rates are expected to rise, the value of existing bonds (which have fixed interest rates) will decrease. To avoid losses, portfolio managers and private individuals would likely sell their bonds before the rates rise, shifting their portfolios from bonds to money or other assets not adversely affected by rising interest rates.

If Portfolio Managers and Private Individuals Expect Market Interest Rates