Everything else held constant,when stock prices become ________ volatile,the demand curve for bonds shifts to the ________ and the interest rate ________.
A)more;right;rises
B)more;right;falls
C)less;left;falls
D)less;left;does not change

Question

Quizplus · Accepted Answer

When stock prices become more volatile, investors may seek the relative safety of bonds, increasing demand for bonds. This shifts the demand curve for bonds to the right, and as demand for bonds increases, the price of bonds goes up, causing interest rates to fall (since bond prices and interest rates move inversely).

Everything Else Held Constant,when Stock Prices Become ________ Volatile,the Demand