The prices of stocks and bonds move
A) in opposite directions to the Fed's interest rate target
B) in opposite directions to the spending patterns of Congress
C) in similar directions to the Fed's interest rate targets
D) in similar directions to the spending patterns of Congress
E) whenever the Open Market Committee threatens a change in the money supply

Question

Quizplus · Accepted Answer

When the Fed raises interest rates, bond prices typically fall because new bonds are issued with higher yields, making existing bonds less attractive. Conversely, stock prices may also fall as higher interest rates increase borrowing costs and reduce consumer spending.

The Prices of Stocks and Bonds Move