There is an inverse relationship between the price of an existing bond and its
A)Par value.
B)Risk yield.
C)Liquidity yield.
D)Current yield.

Question

Quizplus · Accepted Answer

The price of an existing bond will decrease as the current yield of the bond increases. This is because as the yield increases, the bond becomes less attractive to investors, and therefore its price must decrease in order to maintain an equivalent return. Conversely, if the yield decreases, the bond becomes more attractive to investors and its price will increase. The other choices (par value, risk yield, and liquidity yield) do not have a direct impact on the price of an existing bond.

There Is an Inverse Relationship Between the Price of an Existing