As interest rates increase the price of an asset or liability:
A)remains constant
B)decreases
C)increases
D)increases and it increases at a faster rate

Question

Quizplus · Accepted Answer

As interest rates increase, the price of an asset or liability decreases. This is because higher interest rates increase the cost of borrowing, leading to a decrease in demand for loans and therefore a decrease in demand for assets. Additionally, higher interest rates make holding liabilities more expensive, leading to a decrease in demand for liabilities. Overall, this results in a decrease in the price of both assets and liabilities.

As Interest Rates Increase the Price of an Asset or Liability