If interest rates are expected to increase, should investors look to long-term bonds or short-term securities? Explain in your own words© BrainMass Inc. brainmass.com October 10, 2019, 7:55 am ad1c9bdddf
Investors should invest in short-term securities if they expect interest rates to rise. First, they will be locked into today's lower yields until the long-term bonds mature (i.e., they will miss the opportunity to reinvest the bond proceeds at a higher interest rate as rates ...
This solution discusses the advantages of short-term securities over long-term bonds if interest rates are expected to rise.