You currently own $100,000 worth of 1 year bonds and $100,000 worth of 10 year bonds. You believe that interest rates are going to decrease tomorrow. Based on your beliefs, to maximize the benefit to you, TODAY you should ... (Ignore the cost of trading the bonds)
A. sell your 1 year bonds and buy an additional $100,000 of the 10 year bonds and expect a capital gain
B. sell your 1 year bonds and buy an additional $100,000 of the 10 year bonds and expect to avoid a capital loss
C. sell your 10 year bonds and buy an additional $100,000 of the 1 year bonds and expect a capital gain
D. sell your 10 year bonds and buy an additional $100,000 of the 1 year bonds and expect to avoid a capital loss
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “You currently own $100,000 worth of 1 year bonds and $100,000 worth of 10 year bonds. You believe that interest rates are going to decrease ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
A deposit in transit on last period's bank reconciliation is shown as a deposit on the bank statement this period. As a result, in preparing this period's reconciliation, the amount of this deposit should be: A. Added to the book balance of cash. B.
Answers (1)
Which of the following generate the type of externality previously described? (Negative Externality) A) Gilberto has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season.
Answers (1)
If prices are as likely to increase as decrease, why do investors earn positive returns from the market on average?
Answers (1)
An accountant increases the price he charges for his services by 16 percent. In response, the demand for his services decreases by 14 percent.
Answers (1)
Jasmine is the director of marketing for a chain of clothing stores. She has been given a set budget and needs to drive as many potential customers to her website as possible. Which automated bidding strategy should she use in her campaign?
Answers (1)
New Questions in Business
Tangshan China Company's stock is currently selling for $80.00 per share. The expected dividend one year from now is $4.00 and the required return is 13 percent.
Answers (1)
18. What was a major factor in the failure of (mostly) command economies? A. Lack of voting rights B. Lack of the profit motive C. Not enough military spending D. Abundant basic goods
Answers (2)
You are saving to buy a $188,000 house. There are two competing banks in your area, both offering certificates of deposit yielding 7.3 percent.
Answers (1)
Has the company you're auditing recently increased or decreased their operations due to mergers or sales of parts of the business?
Answers (1)
Tom lives in an apartment where he pays $8,000 a year in rent. Sarah lives in a house that could be rented for $10,000 a year. How much do these housing services contribute to GDP?
Answers (1)