If bond portfolio managers expect interest rates to decrease in the future, they would likely ____ their holdings of bonds now, which could cause the prices of bonds to ____ as a result of their actions.

Question

Quizplus · Accepted Answer

If bond portfolio managers expect interest rates to decrease, they would likely increase their holdings of bonds now because bond prices tend to rise when interest rates fall. As more managers buy bonds, the increased demand can cause bond prices to increase.

If Bond Portfolio Managers Expect Interest Rates to Decrease in the Future