If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally

Question

Quizplus · Accepted Answer

If overall interest rates in the economy rise, the yield on newly issued and existing bonds will increase as well. As a result, the price of existing bonds with fixed interest rate will decrease to align with the prevailing market rate. Therefore, a corporate bond with a fixed interest rate will generally decrease in value when interest rates rise.

If Overall Interest Rates in the Economy Rise, a Corporate