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Suppose that you inherited some 2.25% US Treasury bonds from your grandfather that mature in 2027. Although they were originally purchased at par (and will mature at $1,000), they currently have a market value of around $950 each. If you believe that interest rates will continue to rise, should you sell, hold, or try to buy more? Explain why.

Respuesta :

Answer:

we will sell bond and invest for better investments

Explanation:

we know here that Yield on Treasury Bond of Grandfather =  2.25%

so we believe interest rate will be continue for rise

Bond are valued = $950

so we  the Bond and invest the proceed for better interest rate

and

we know  Grandfather bond price will be decrease if rate increase as that we predict

because we know  Bonds prices and the interest rate is inversely proportional to the each other

so as that  if interest rate increases Bonds prices will be decrease

and the Vice Versa

so that we will sell bond and invest for better investments

because here if once the interest rate increase then he will selling point regarding for Bond and price will be fall

If the interest rates continue to rise, the bonds should be sold. This is because as interest rates rise, the value of the bond declines.

What is a bond?

A bond is a debt instrument that gives the holder of the bond the right to receive regular amounts that have been predetermined. When the bond matures, the bond holder receives the amount invested back.

The value of a bond is inversely related to interest rates. As interest rate rise, the value of the bond declines.

To learn more about interest, please check: https://brainly.com/question/26164549

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