If interest rates in the economy decrease, a corporate bond with a fixed interest rate will increase in value.

Question

Quizplus · Accepted Answer

When interest rates in the economy decrease, the demand for fixed-income securities such as corporate bonds increases. As a result, the prices of existing bonds increase, allowing investors to sell them at a premium. This causes the value of a corporate bond with a fixed interest rate to increase.

If Interest Rates in the Economy Decrease, a Corporate Bond