When making investment decisions,investors
A)compare the real interest rates offered on different bonds.
B)compare the nominal,but not the real,interest rates offered on different bonds.
C)purchase the highest-priced bond available.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When making investment decisions, investors should compare the real interest rates offered on different bonds because this takes into account the effects of inflation on the return of the investment. By comparing real interest rates, investors can determine which bonds will provide the highest purchasing power in the long term. Comparing nominal interest rates alone can be misleading, as inflation can erode the value of the returns. Choosing the highest-priced bond available is not necessarily the best strategy, as the price of a bond is influenced by many factors and does not guarantee a higher return on investment.

When Making Investment Decisions,investors