If prevailing interest rates increase, the market price of previously issued bonds will

Name: If prevailing interest rates increase, the market price of previously issued bonds will
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Question

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When prevailing interest rates increase, the market price of previously issued bonds decreases because the fixed payments from the older bonds become less attractive compared to new bonds issued at the higher current rates. Investors will demand a discount on the older bonds, leading to a decrease in their market price.

If Prevailing Interest Rates Increase, the Market Price of Previously