Unformatted text preview: prices will rise more than short-term bond prices. You would rather be holding long-term bonds if there is a decline in interest rates. 14. Use real interest rates. 5% - 2% = 3%. 10% - 9 % = 1%. People will be more likely to buy homes, since the cost of borrowing has declined in real terms....
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This note was uploaded on 04/14/2011 for the course ECON 311 taught by Professor Edwardson during the Spring '08 term at Texas A&M.
- Spring '08