There is an increase in expected inflation. All else equal, existing bond prices will:

Name: There is an increase in expected inflation. All else equal, existing bond prices will:
Brand: Quizplus
Rating: 4.7 (49 reviews)

Question

Quizplus · Accepted Answer

When expected inflation increases, the real value of the fixed payments from existing bonds decreases, making them less attractive to investors. As a result, the market price of these bonds falls to adjust for the higher expected inflation.

There Is an Increase in Expected Inflation