Question

A mutual fund invested in bonds with medium-length maturities. As the bonds matured, the fund reinvested the proceeds and purchased long-term bonds with maturities of up to 20 years. What might have happened to the fund if the reinvestment had occurred during a period when interest rates were rising

Answer 1

Answer:

III and IV

Explanation:

As if the greatest the number of years for maturity, the chances of the risk is high also the long term bonds contains the high rate of interest as compared with the medium or short term bonds

Also if the fund replace with the medium to long term so the rate of interest could be highly charged that earned more income also if the rate of interest is increased the yield also increased

So based on the given option, the third and fourth option is correct