Asked by marlon moonsammy on May 12, 2024
Verified
When bond prices go up,interest rates
A) go up.
B) stay the same.
C) go down.
D) may go up,stay the same,or go down.
Bond Prices
The market price at which a bond is traded, influenced by factors such as interest rates, the credit rating of the issuer, and the bond's maturity period.
Interest Rates
The share of a loan attributed to interest charges to the borrower, regularly described as an annual percentage of the remaining loan balance.
- Perceive the association that exists between bond prices, interest rate adjustments, and actions of monetary policy.
Verified Answer
HS
halima siddiqMay 14, 2024
Final Answer :
C
Explanation :
When bond prices go up, interest rates go down. This is because when the demand for bonds increases and their prices go up, the effective interest rate or yield on those bonds decreases. Therefore, in order to attract investors, issuers of new bonds have to offer lower interest rates.
Learning Objectives
- Perceive the association that exists between bond prices, interest rate adjustments, and actions of monetary policy.