Question

If interest rates are expected to increase in the near future, you are better off holding onto a long-term bond.

	A.	False: Long-term bonds are never a good investment when the economy is growing normally.
	B.	True: You'll gain more by owning long-term bonds when interest rates rise.
	C.	False: You should hold onto shorter term bonds that are less subject to prices falling if interest rates rise.
	D.	True: Short-term bonds are a very bad idea.

Answer 1

If interest rates are expected to increase in the near future, you are better off holding onto a long-term bond.

ANSWER : C : False: You should hold onto shorter term bonds that are less subject to prices falling if interest rates rise. (THUMBS UP PLEASE)

EXPLANATION : Interest rate risk is higher in case of longer term bonds. So it is better to hold on short term bonds rather than long term bonds.

Increase in rates will lead to more decline in price of longer term bonds than short term bonds