Pedro is trying to take advantage of the bond valuation relationships. He has figured out that when you expect interest rates to go up, buy ________ bonds and when you expect interest rates to go down, buy ________

A) government bonds; short-term bonds
B) interest-indexed bonds; long-term bonds
C) very long-term; bonds with very short-term maturities that are not callable
D) very short-term; bonds with very long-term maturities that are not callable
E) interest-proof; long-term bonds


Answer: D

Business

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