Prices of existing bonds move ________ as market interest rates move ________.

Question

Quizplus · Accepted Answer

When market interest rates rise, the prices of existing bonds decrease in order to make them more competitive with newly issued bonds that have higher interest rates. Conversely, when market interest rates fall, the prices of existing bonds increase as they become more attractive compared to newly issued bonds with lower interest rates. Therefore, bond prices move opposite to changes in market interest rates.

Prices of Existing Bonds Move ________ as Market Interest Rates