Investors expectations for inflation change

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Reference no: EM131057249

The yield-to-maturity of a bond will change over time as investors' expectations for inflation change. Specifically, if people think inflation will go up (down), the yield-to-maturity on existing bonds should go up (down) as well.

True or False?

In a typical year, the average actively managed mutual fund under performs the index it most closely matches in terms of holdings.

True or False?

"You own two bonds. Both bonds have 7% coupons. One bond matures in 10 years, the other bond matures in 15 years. The price of the 15 year bond will be more sensitive to changes in interest rates than the price of the 10 year bond."

True

False

Reference no: EM131057249

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