When interest rates decline, investors who want to earn a high return may tend to ____ in stock mutual funds, and ____ deposits in depository institutions.

Question

Quizplus · Accepted Answer

When interest rates decline, investors who want to earn a high return may tend to increase their investments in stock mutual funds as stocks may offer higher returns than fixed-income securities. On the other hand, they may reduce their deposits in depository institutions as the interest earned on these deposits will be lower due to the decline in interest rates. Therefore, option C is the correct answer.

When Interest Rates Decline, Investors Who Want to Earn a High