Falling interest rates cause the market value of previously issued bonds to
A) rise.
B) fall.
C) remain unchanged.
D) increase during periods of inflation but decline during periods of deflation.

Question

Quizplus · Accepted Answer

When interest rates fall, the market value of existing bonds rises because their fixed interest payments become more attractive compared to new bonds issued at the lower current rates.

Falling Interest Rates Cause the Market Value of Previously Issued