Why weere bonds a terrible investment from 1945 through to the early 1980s? because of economic recession
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From mid- 2008 to early $2009,$ the Dow Jones Industrial Average declined by more than $50 \%$, while real interest rates were low or falling. What does this scenario suggest should have happened to investment?
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Many retired people invest a significant portion of their money in bonds of corporations because of their relatively low level of risk. During the 1980s, significant inflation caused some interest rates to rise to as high as 15 percent. Retired people who bought bonds that paid only 6 percent continued to earn at the lower rate. During the 1990s, inflation subsided and interest rates declined. Many corporations took advantage of the call ability feature of these bonds and retired the bonds early. Many of these early retirements of high interest rate bonds were replaced with low interest rate bonds. Required: In your judgment, is it ethical for corporations to continue paying low interest rates when rates increase but to call bonds when rates decrease? Why or why not?
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