If yields on Treasury bonds rise
A) the value of the corresponding bonds will rise and the value of interest rate options will fall.
B) the value of the corresponding bonds and the value of interest rate options will both fall.
C) the value of the corresponding bonds will fall and the value of interest rate options will rise.
D) the value of the corresponding bonds and the value of interest rate options will both rise.

Question

Quizplus · Accepted Answer

When yields on Treasury bonds rise, the price of the bonds falls. Interest rate options, which often benefit from rising rates, will increase in value.

If Yields on Treasury Bonds Rise