Which of the following statements is true about bonds?

Question

Quizplus · Accepted Answer

The price of a bond and its interest rate have an inverse relationship. When interest rates rise, the price of existing bonds falls to make them more competitive with new bonds offering higher interest rates. Conversely, when interest rates fall, the price of existing bonds rises because they offer a higher yield than new bonds with lower interest rates. The other choices are not accurate. A newly issued bond seller is the borrower, not the buyer (choice A). When governments and corporations want to borrow money, they issue bonds and sell them to buyers (choice B). A bond owner can sell their bond before it matures (choice C).

Which of the Following Statements Is True About Bonds