When the Fed ________ interest rates, bond prices ________.

Question

Quizplus · Accepted Answer

When the Fed lowers interest rates, bond prices rise. This is because when interest rates are lowered, investors are willing to pay more for existing bonds with higher interest rates, which leads to an increase in bond prices. Conversely, when the Fed raises interest rates, bond prices typically fall as investors are less willing to pay a premium for bonds with lower interest rates.

When the Fed ________ Interest Rates, Bond Prices ________

When the Fed Interest Rates, Bond Prices