How do bond traders make money? They buy bonds in anticipation of inflation rises and rate hikes, and sell bonds anticipating falls in inflation and rate cuts They buy bonds in anticipation of inflation rises and rate hikes and sell bonds anticipating rises in inflation and rate increases. They sell bonds in anticipation of inflation rises and rate hikes, and buy bonds anticipating falls in inflation and rate cuts

How do bond traders make money? They buy bonds in anticipation of inflation rises and rate hikes, and sell bonds anticipating falls in inflation and rate cuts They buy bonds in anticipation of inflation rises and rate hikes and sell bonds anticipating rises in inflation and rate increases. They sell bonds in anticipation of inflation rises and rate hikes, and buy bonds anticipating falls in inflation and rate cuts

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section: Chapter Questions

Problem 3PA

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Similar questions

Draw the demandand supply curves forthe bond market, andidentify the equilibrium interest rate.
Why is the relationship between price and yield negative?a. Because investors reward higher cash-flows with a lower price.b. Because governments regulation prohibits a positive relationship.c. Because an increase in the yield discounts cash flows at a higher rate and so their netpresent value decreases.d. Because cash flows are variable over a bond’s life.
Stock prices fell throughout much of 2007 and 2008 and many investors decided to switch their funds into the bond market. What only about 30 percent of surveyed investors knew was that as bond prices rise, interest rates a. fall in reaction to the decreased demand for bonds. b. rise in reaction to the increased demand for bonds. c. fall in reaction to the increased demand for bonds. d. rise in reaction to the decreased demand for bonds.
Why Bond Buyers Fear Market Volatility, Not a Recession, Fund Flows Show?
If interest rates decline, which would you rather beholding, long-term bonds or short-term bonds? Why?Which type of bond has the greater interest-rate risk?
Type out the correct answer ASAP with proper explanation of the each option.thank you. How do trends in bond interest rates help predict changes in the business cycle? A.When long-term rates are higher than short-term rates, a recession is likely. B.When long-term rates are lower than short-term rates, an expansion is likely. C.When long-term rates are higher than short-term rates, a trough is present. D.When long-term rates are lower than short-term rates, a recession is likely.
Answer the question based on the following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest rate = 10 percent. If the price of this bond increases to $1,250, the interest rate will Multiple Choice rise to 12.5 percent. fall to 2.5 percent. fall to 8 percent. rise to 18 percent. fall to 1.25 percent.