What would happen if bond prices were to fall?
A)The interest rates would always remain constant
B)The interest rates would increase
C)The interest rates would decrease
D)The demand for money would decrease

Question

Quizplus · Accepted Answer

If bond prices were to fall, the interest rates would decrease.
Key Takeaway: Remember that there is an inverse relationship between bond prices and the interest rate. If bond prices rise, the interest rates fall; if bond prices fall, the interest rates rise.

What Would Happen If Bond Prices Were to Fall