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Business, 19.02.2021 01:00 math4863

An article in the New York Times notes that​ "rising bond yields can ... signal the threat of​ inflation." ​Source: Nelson D.​ Schwartz, "Surprise Increase in Rates Is Credited to Signs of​ Recovery," New York Times​, March​ 18, 2012. If investors expect inflation to be​ higher: A. the yields on bonds will rise because investors will demand more bonds at the current interest rates causing the price of bonds to increase. B. the yields on bonds will fall because the price of bonds will fall due to the higher level of inflation. C. the yields on bonds will rise because investors will need a higher rate of return on the bonds they are purchasing. D. the yields on bonds will fall because the higher inflation rate will reduce the real interest earned on the bonds and causing the yields to decrease.

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