Question

"Everything else held constant, when stock prices become ________ volatile, the demand curve for bonds shifts to the ________ and the interest rate ________"

Answer 1

left; rises

Step-by-step explanation:

Bonds and Stocks are different options for investment. When stock prices becomes volatile, People will become more interested to put their investment ins stocks. This will make the amount of people who invested in bonds decreased, hence causing the demand for bonds shift to the less.

Since the demand decreased, the issuer of the bond need to do something to attack investors to purchase it. This is why they will increase the interest rates for their bonds. Higher interest = more profit for the bond purchaser.