Assuming interest rates are expected to fall,which of the following will most likely maximize price increase?

Question

Quizplus · Accepted Answer

30 year corporate bonds are likely to have the greatest price increase in a falling interest rate environment due to their longer maturity and higher yield compared to short-term instruments like commercial paper and U.S. Treasury bills. The inverse relationship between interest rates and bond prices means that as interest rates fall, bond prices rise. Longer-term corporate bonds tend to have higher yields than shorter-term securities, which means they will have more significant price gains when interest rates decrease.

Assuming Interest Rates Are Expected to Fall,which of the Following