Ceteris paribus,if bond prices rise,then

Question

Quizplus · Accepted Answer

There is an inverse relationship between bond prices and bond yields. As bond prices rise, bond yields fall, and vice versa. This is because as bond prices increase, the yield on the bond becomes relatively lower and less attractive to investors. Therefore, option C is the correct answer. Option A is incorrect because there is an effect on bond yields. Option B is incorrect because bond yields will actually decrease. Option D is also incorrect because there is no information to suggest that the Federal Reserve is pursuing contractionary monetary policy.

Ceteris Paribus,if Bond Prices Rise,then