Which of the following statements are true?

Question

Quizplus · Accepted Answer

A rise in interest rates causes bond prices to fall. This is because as interest rates increase, investors demand higher yields on their investments, and bond prices must fall to provide these higher yields. Conversely, when interest rates fall, bond prices tend to rise as investors will accept lower yields on their investments. Option A is incorrect because a fall in bond prices actually causes interest rates to rise, not fall. Option B is incorrect because a fall in interest rates actually causes bond prices to rise, not fall. Option D is incorrect because bond prices and interest rates are strongly connected, and changes in one can have significant effects on the other.

Which of the Following Statements Are True