If people think interest rates are above their normal levels,they will want to hold bonds in anticipation of a capital gain when interest rates fall to their normal level.

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This statement is true. When interest rates are perceived as high, investors may expect them to eventually fall back down to normal levels. Holding bonds can provide a fixed income stream in the meantime, and if interest rates do fall as anticipated, the value of the bonds held may increase as other investors seek to buy them at a higher price to lock in higher yields. This potential for a capital gain is a key attraction of bond investments during periods of high interest rates.

If People Think Interest Rates Are Above Their Normal Levels,they