An investor who expects declining interest rates would maximize her capital gain by purchasing a bond that has a ________ coupon and a ________ term to maturity.

A) low; long
B) high; short
C) high; long
D) zero; long

Declining Interest Rates

A situation in which the general level of interest rates in the economy is decreasing, affecting borrowing costs, investment returns, and economic activity.

Capital Gain

The profit realized from the sale of a capital asset, such as stock or real estate, when the selling price exceeds the original purchase price.

Term To Maturity

The remaining time until a debt instrument is due for repayment.