How might a sudden decrease in people's expectations of future real estate prices affect interest rates? O A. Interest rates would increase because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase. OB. Interest rates would increase because real estate would have a relatively higher rate of return compared to bonds, which would cause the demand for bonds to decrease. OC. Interest rates would decrease because real estate would have a relatively higher rate of return compare to bonds, which would cause the demand for bonds to decrease. OD. Interest rates would decrease because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase.
How might a sudden decrease in people's expectations of future real estate prices affect interest rates? O A. Interest rates would increase because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase. OB. Interest rates would increase because real estate would have a relatively higher rate of return compared to bonds, which would cause the demand for bonds to decrease. OC. Interest rates would decrease because real estate would have a relatively higher rate of return compare to bonds, which would cause the demand for bonds to decrease. OD. Interest rates would decrease because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:How might a sudden decrease in people's expectations of future real estate prices affect interest rates?
O A. Interest rates would increase because real estate would have a relatively lower rate of return compared
to bonds, which would cause the demand for bonds to increase.
B. Interest rates would increase because real estate would have a relatively higher rate of return compared
to bonds, which would cause the demand for bonds to decrease.
OC. Interest rates would decrease because real estate would have a relatively higher rate of return compared
to bonds, which would cause the demand for bonds to decrease.
O D. Interest rates would decrease because real estate would have a relatively lower rate of return compared
to bonds, which would cause the demand for bonds to increase.
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