Which one of the following statements is NOT true?
A) Interest rate risk is the risk that bond prices will change as interest rates change.
B) Interest rate changes and bond prices are inversely related.
C) As interest rates increase, bond prices increase.
D) Long-term bonds are more price volatile than short-term bonds of similar risk.

Question

Quizplus · Accepted Answer

As interest rates increase, bond prices decrease. This is because newer bonds will offer a higher yield, making existing bonds less attractive and causing their prices to drop.

Which One of the Following Statements Is NOT True