If interest rates consistently rise over a specific period, the market price of a bond you own would likely ____ over this period. (Assume no major change in the bond's default risk.)

Question

Quizplus · Accepted Answer

When interest rates rise, newly issued bonds offer higher yields, making them more attractive to investors than existing bonds with lower yields. As a result, the market price of existing bonds decreases to adjust for the lower demand. Therefore, if interest rates consistently rise over a specific period, the market price of a bond will likely consistently decrease over this period.

If Interest Rates Consistently Rise Over a Specific Period, the Market