Yields on all federal government securities are fixed and do not change with changes in interest rates.

Question

Quizplus · Accepted Answer

Yields on federal government securities can change with changes in interest rates, especially in cases where the securities have a longer maturity period. This is because bond prices and yields have an inverse relationship, meaning that as interest rates increase, bond prices decrease and yields increase. Therefore, the fixed yield on a federal government security may not necessarily equate to its market yield at any given time.

Yields on All Federal Government Securities Are Fixed and Do