Question

Why would we see the prices on U.S. government bonds suddenly rise? Multiple Choice Bond prices can't rise or fall they are stable. If we had a sudden explosion of good economic news like lower unemployment, a booming stock market that returned average rates of return of 15 percent, or the signing of new peace treaties (i.e. Israel & Iran), then we would see bonds prices rise on U.S. government bonds. They would rise if there was suddenly lots of bad economics news like higher unemployment, an increase in natural disasters like explding volcanoes, or the start of new wars (i.e. China attacks Taiwan), then we would see bond prices rise on U.S. government bonds. Bond prices can only rise if the U.S. government pays more interest on these investments. O

Answer 1

Answer is C.

Bonds are issued by government so they are safe for investment because government will not bankrupt. When there is bad news in yhe the economy investors try to purchase the bonds because they have fixed returns and they are safe to invest. So due to bad news investors increases the demand for bonds. This increase in demand of bonds will increase the prices of bonds.

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