A rise in the price of a bond causes the yield of the bond to
A)rise.
B)fall.
C)remain unchanged.
D)rise if it's a short-term bond, fall if it's a long-term bond.

Question

Quizplus · Accepted Answer

When the price of a bond increases, the yield will decrease proportionally. This relationship between bond price and yield is known as the inverse relationship. Therefore, if the price of a bond rises, the yield will fall.

A Rise in the Price of a Bond Causes the Yield