When bond prices increase,interest rates:
A) must increase.
B) must decrease.
C) will not change.
D) will first increase and then decrease.

Name: When bond prices increase,interest rates: A) must increase. B) must decrease. C) will not change. D) will first increase and then decrease.
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Question

Quizplus · Accepted Answer

When bond prices increase, it means there is a higher demand for bonds, which in turn drives down the interest rate. Therefore, interest rates must decrease.

When Bond Prices Increase,interest Rates