Ahmad as a financial advisor has given you the following advice

Economics Nov 04, 2020

Ahmad as a financial advisor has given you the following advice. “Long term bonds are the greatest investment because their interest rate is over 20%”. Is Ahmad, necessarily right? Justify your answer. Note: Your answers should be detailed with proper references.

Expert Solution

No. It isn't true always.

On the off chance that loan costs rise or forcefully or interest rate increases sharply ater on, long terms bonds may endure such a sharp fall in value or price that their return may be very low, perhaps even negative.

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