Because a rise in interest rates, and therefore the required return, results in an increase in bond value, bondholders are typically more concerned with dropping interest rates.

Question

Quizplus · Accepted Answer

A rise in interest rates typically leads to a decrease in bond value, as the fixed interest payments become less attractive compared to new bonds issued at higher rates. Bondholders are more concerned with rising interest rates, not dropping ones.

Because a Rise in Interest Rates, and Therefore the Required