When the Bank of Canada's actions cause interest rates on newly-issued bonds to increase from 5% to 6%,the prices of existing bonds

Question

Quizplus · Accepted Answer

When interest rates on newly-issued bonds increase, the demand for existing bonds decreases and their price falls. This is because existing bonds with lower interest rates are less attractive to buyers than newly issued bonds with higher interest rates. Hence, existing bond prices will decrease.

When the Bank of Canada's Actions Cause Interest Rates on Newly-Issued