8-25 The market value of a fixed-rate liability will decrease as interest rates rise,just as the market value of a fixed-rate asset will decrease as interest rates rise.

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This is because as interest rates rise, the fixed-rate liability becomes less attractive compared to other investments offering higher returns. Therefore, its market value decreases. Similarly, the market value of fixed-rate assets decreases because investors can earn higher returns with newly issued securities that have higher interest rates.

8-25 the Market Value of a Fixed-Rate Liability Will Decrease