Question

Which sequence follows an expected fall in interest rate?

विकल्प

• Bond price falls, interest rate rises, and hold only money

• Expected rise in bond price, capital gain, and buy bonds

• Speculative demand becomes infinite, and buy bonds

• Expected fall in bond price, capital loss, and sell bonds

Answer 1

An expected fall in interest rate produces an expected rise in bond price. People expect capital gain and therefore buy bonds.