Final answer:
Aggressive investors purchase bonds when they believe interest rates will rise.
Step-by-step explanation:
Statement 2) Aggressive investors purchase bonds when they believe interest rates will rise is the correct statement concerning bond investors. Aggressive investors are willing to take on more risk to potentially earn higher returns. They believe that interest rates will rise, which will cause the value of their bonds to decrease. They can then sell their bonds at a profit.
The correct statement concerning bond investors is:
Conservative investors seek capital gains.
This statement aligns with the typical behavior of conservative investors in the bond market. Conservative investors often prioritize capital preservation and are more inclined to invest in bonds when they anticipate the potential for capital gains. This is because, in times of higher interest rates, existing bonds with lower coupon rates may be traded at a discount, providing an opportunity for capital appreciation if interest rates decline.
The other statements are not accurate:
Aggressive investors typically seek higher returns and may not necessarily want to lock in high interest rates.
Aggressive investors are more likely to purchase bonds when they believe interest rates will fall, not rise.
Conservative investors are more likely to buy bonds when interest rates are low to benefit from higher coupon payments relative to prevailing market rates.