Bond yields move inversely to bond price changes.

Question

Quizplus · Accepted Answer

When bond prices go up, bond yields go down and vice versa. This inverse relationship is due to the fact that when bond prices rise, the bonds become more expensive, and therefore offer a lower yield (or return) to investors. Conversely, when bond prices fall, the bonds become cheaper, and therefore offer a higher yield to investors. This relationship is important for investors to understand, as changes in bond yields can have a significant impact on the overall performance of a bond portfolio.

Bond Yields Move Inversely to Bond Price Changes