As interest rates rise,the expected absolute return of money ________,money's expected return relative to bonds ________.
A)does not change;decrease
B)rises;decrease
C)does not change;increase
D)falls;decrease

Question

Quizplus · Accepted Answer

As interest rates rise, the expected absolute return of money does not change because the return on holding money (not investing it) is essentially zero. However, money's expected return relative to bonds decreases because bonds, which pay interest, become more attractive as their yields increase with rising interest rates.

As Interest Rates Rise,the Expected Absolute Return of Money ________,Money's