Suppose interest rates have been at historically low levels the past two years.A reasonable strategy for bond investors during this time period would be to

Question

Quizplus · Accepted Answer

With historically low interest rates, investing in short-term bonds would decrease the likelihood of interest rate risk. Short-term bonds would have less exposure to future fluctuations in interest rates compared to long-term bonds. Additionally, buying junk bonds increases credit risk and may not be a prudent strategy for all investors. Investing in long-term bonds to lock in a position for when interest rates increase could potentially lead to losses if interest rates continue to stay low or decrease further. Therefore, option B would be the most reasonable strategy for bond investors during this time period.

Suppose Interest Rates Have Been at Historically Low Levels the Past