An article in the New York Times notes that \"rising bond yields can .signal the

Question

An article in the New York Times notes that "rising bond yields can .signal the threat of inflation." Source: Nelson D. Schwartz, Surprise Increase in Rates Is Credited to Signs of Recovery," New York Times, March 18, 2012. If investors expect inflation to be higher O A. the yields on bonds will fall because the higher inflation rate will reduce the real interest earned on the bonds and causing the yields to decrease. OB, the yields on bonds will nse because investors will need a higher rate of return on the bonds they are purchasing. O C. the yields on bonds will rise because investors will demand more O D. the yields on bonds will tal because the price of bonds will fll due to the higher level of inflation. bonds at the current interest rates causing the price of bonds to increase. Click to select your answer. 7388 18

Explanation / Answer

B) The yields on bonds will rise because investors will need a higher rate of return on the bonds they are purchasing. Investors will look to the future inflation rate and set the price for the bonds, hence they will need more returns for the bonds.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.