If interest rates consistently decline over a specific period, the market price of a bond you own would likely ____ over this period. (Assume no major change in the bond's credit risk.)

Question

Quizplus · Accepted Answer

When interest rates decline, the market price of existing bonds, which have higher interest rates compared to new bonds, tends to increase. This is because the existing bonds become more attractive to investors seeking higher yields, driving up their market price.

If Interest Rates Consistently Decline Over a Specific Period, the Market