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

Question

Quizplus · Accepted Answer

When interest rates decrease, the prices of existing bonds increase because they offer a higher coupon rate than the new bonds issued at lower interest rates. Therefore, investors are willing to pay more for higher-yielding bonds, which causes the prices of existing bonds to increase.

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