Q353
Prices of bonds will be decreased if an interest rates
A.
rises
AnswerB.
declines
C.
equals
D.
none of above
Answer: Option A
Solution
Answer: Option A
Solution:
Prices of bonds will be decreased if an interest rates rises. An existing bond's price or present value moves in the opposite direction of the change in market interest rates: Bond prices will go up when interest rates go down, and Bond prices will go down when interest rates go up.