What will be the effect on bond prices and interest rates

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Reference no: EM131305430

Suppose that in 2010 most investors accept Bill Tedford's forecast that inflation will be higher in future years.

a. What will be the effect on bond prices and interest rates?

b. Suppose that Tedford turns out to be wrong, and the inflation rate remains low. Who is likely to have gained the most: investors who bought long-term bonds in 2010 or investors who sold them? Briefly explain.

Reference no: EM131305430

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