Holding all other variables constant, as market interest rates increase, bond prices decrease.

Name: Holding all other variables constant, as market interest rates increase, bond prices decrease.
Brand: Quizplus
Rating: 5.0 (52 reviews)

Question

Quizplus · Accepted Answer

This is due to the inverse relationship between bond prices and market interest rates. When interest rates rise, newly issued bonds will offer higher yields, making existing bonds with lower yields less attractive. This causes the demand for existing bonds to decrease, leading to a decrease in their prices.

Holding All Other Variables Constant, as Market Interest Rates Increase