Final answer:
The statement is generally false; bondholders could prefer long-term bonds in a falling interest rate scenario due to the greater potential for price appreciation. A fall in demand and a rise in supply in the financial market will lead to lower interest rates.
Step-by-step explanation:
Concerning the statement If the interest rate drops by the same amount for short-term bonds as for long-term ones, bondholders would prefer to hold short-term bonds, the correctness of this claim can vary depending on the context and the objectives of bondholders. However, in many cases, the statement can be considered false. When interest rates drop, the price of existing bonds generally rises, as they are paying a higher interest rate than what is newly available on the market. This effect is more pronounced for long-term bonds because they promise to pay the higher interest rate for a longer period. Therefore, bondholders may actually prefer long-term bonds in a declining interest rate environment since the potential for price appreciation is greater than it is for short-term bonds.
7.b and 7.c from the provided context indicates that a fall in demand and a rise in supply will lead to a fall in interest rates. With more available lenders, the competition for borrowers will drive rates down, making bonds less attractive investment vehicles compared to scenarios where interest rates are higher.