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if there is an increase in interest rates would you take lonterm bonds

if there is an increase in interest rates would you take lonterm bonds

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Answer #1

If there is an increase in interest rates, I would not take long-term bonds because as we know that there is inverse relationship between interest rates and market value of bonds.

As we know that if interest rates increase then market value of bonds will be decreased and if interest rates decrease then market value of bonds will be increased.

Hence, it is true that in case of increasing interest rates, we should not take long-term bonds due to an decrease in the market value of the bonds.

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