Rising interest rates will cause the market value of

Question

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When interest rates rise, the value of existing bonds decreases due to the opportunity cost of higher interest rates elsewhere. This means that the market value of call options on bonds decreases, as the underlying asset (the bond) is also decreasing in value. On the other hand, put options on bonds would increase in value, as the holder has the right to sell the bond at a higher strike price than the market value. However, option prices are also affected by other factors such as time to expiration and volatility. Bond futures may or may not be affected by rising interest rates, depending on the specific circumstances of the market.

Rising Interest Rates Will Cause the Market Value of