Interest rates on different financial assets tend to all rise together and fall together.

Question

Quizplus · Accepted Answer

Generally, interest rates on different financial assets tend to move in the same direction because they are influenced by similar factors such as inflation, economic growth, and monetary policy. When the central bank raises interest rates, it affects the cost of borrowing and lending across different markets, leading to higher yields on bonds, savings accounts, and other investments. Similarly, when interest rates decline, all financial assets tend to experience lower returns. However, there may be some variation in the magnitude of interest rate changes or the specific factors impacting each asset class, which can cause some divergence in their performance over time.

Interest Rates on Different Financial Assets Tend to All Rise