The price of a bond is affected by its interest rate.

Name: The price of a bond is affected by its interest rate.
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Question

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The price of a bond is inversely related to interest rates: when interest rates rise, bond prices fall, and when interest rates fall, bond prices rise. This is because the fixed interest payments of a bond become more or less attractive compared to the new rates available in the market.

The Price of a Bond Is Affected by Its Interest