If the Federal Reserve unexpectedly raised its interest rate target,which of the following would most likely occur?
A) The interest rate would increase and bond prices would rise.
B) The interest rate would decrease and bond prices would rise.
C) The interest rate would increase and bond prices would fall.
D) The interest rate would decrease and bond prices would fall.
E) The interest rate would increase but bond prices would not change.

Question

Quizplus · Accepted Answer

When the Federal Reserve unexpectedly raises the interest rate target, the interest rate in the market will rise. As a result, the demand for bonds in the market will decrease, leading to a fall in the bond prices. Therefore, the correct choice is C.

If the Federal Reserve Unexpectedly Raised Its Interest Rate Target,which