A bond's price is sensitive to changes in

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A bond's price is affected by all of these factors. If interest rates increase, the price of bonds decreases because investors can get a better return elsewhere. The accepted rate of return on investment also affects bond prices, as investors will only be willing to pay a certain amount for a bond based on the return it offers. Investor confidence in the stability and credit worthiness of the firm is also important, as a bond from a firm with a strong credit rating will have a higher price than a bond from a riskier firm.

A Bond's Price Is Sensitive to Changes in