Answers
ANSWER 1: OPTION B
EXPLANATION:
If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices. If inflation increases, interest rates would also increase and will lead to fall in the bond price.
ANSWER 2:OPTION B
EXPLANATION:
The price of a discount bond will increase over time, assuming that the bond’s yield to maturity remains constant.If a bond's price is greater than the required rate of return ,it is a premium bond.
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