Suppose the Bank of Canada announces plans to issue $100billion of new bonds. Assuming the announcement was not expected, what effect, other things held constant, would that have on bond prices and interest rates?
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Priceswould decreaseand interest rates wouldincrease.
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Prices and interest rates wouldboth increase.
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Priceswould increaseand interest rates woulddecrease.
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Prices and interest rates wouldboth decrease.