As interest rates consistently rise over a specific period, the market price of a bond you own would likely ____ over this period. (Assume no major change in the bond's default risk.)

Question

Quizplus · Accepted Answer

As interest rates rise, the market demand for existing bonds decreases, as investors can earn higher yields on new bonds. This leads to a decrease in the market price of existing bonds. Therefore, the market price of the bond you own will likely consistently decrease over the period of rising interest rates.

As Interest Rates Consistently Rise Over a Specific Period, the Market