Which of the following statements is true of bond prices? A a fall in interest rates causes a fall in the bond prices B. a rise in interest rates causes bond prices to fall C. bond prices and interest rates are not connected D. a fall in bond prices causes interest rates to fall
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When interest rates rise, new bonds are issued with higher yields, making existing bonds with lower yields less attractive. As a result, the demand for existing bonds decreases, causing their prices to fall. Conversely, when interest rates fall, new bonds are Show more…
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