[amp_mcq option1=”bond prices to fall more than stock prices” option2=”bond prices to rise more than stock prices” option3=”stock prices to fall more than bond prices” option4=”stock prices to rise and bond prices to fall.” correct=”option3″]<\/p>\n
The correct answer is: C. stock prices to fall more than bond prices.<\/strong><\/p>\n When market interest rates are expected to rise, the prices of bonds will fall. This is because the yield on a bond is inversely related to its price. When interest rates rise, the yield on a bond also rises, which makes existing bonds less attractive to investors. As a result, bond prices fall to bring the yield back in line with the new market rate.<\/p>\n Stock prices, on the other hand, are not as directly affected by changes in interest rates. This is because stocks are a riskier investment than bonds, and investors are willing to pay a higher price for them in order to earn a higher return. However, if interest rates rise significantly, it could lead to a decline in economic activity, which would hurt corporate profits and stock prices.<\/p>\n In conclusion, when market interest rates are expected to rise, you would expect stock prices to fall more than bond prices.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”bond prices to fall more than stock prices” option2=”bond prices to rise more than stock prices” option3=”stock prices to fall more than bond prices” option4=”stock prices to rise and bond prices to fall.” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-52598","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n