The price of a bond with a fixed coupon has a/an _______ relationship with the market interest rates.

Question

Quizplus · Accepted Answer

The price of a bond and market interest rates have an inverse relationship, meaning that as market interest rates increase, the price of a bond with a fixed coupon decreases, and vice versa. This is because investors demand a higher yield to compensate for the increase in market interest rates, decreasing the bond's value.

The Price of a Bond with a Fixed Coupon Has