Question

If rosa expects interest rates to fall for the next 10 years she should invest her money in

a. one year CD
b. money market account
c. 10 year bonds
d.treasury bills

Answer 1

The answer is d. treasury bills

Treasury bills yielding no interest but you can get it at a discounted price.

Let's say you just have to pay $ 90,000 for $ 100,000 ten years investment. It means you will gain 10,000 after 10 years eventhough the interest rates fall