There is an inverse relationship between bond prices and market interest rates.

Question

Quizplus · Accepted Answer

As bond prices increase, market interest rates decrease and vice versa. This is known as the bond price-yield relationship. When interest rates rise, newly issued bonds offer higher yields, making existing bonds with lower yields less valuable. This causes their prices to decrease, leading to an inverse relationship between bond prices and market interest rates.

There Is an Inverse Relationship Between Bond Prices and Market