If interest rates rise, bonds become more attractive to investors, so bond prices will rise. Therefore, when interest rates rise, bond prices will also rise. The above statement is___________.

For example if a bond has a face value of $80 and at maturity it pays $100, it means the interest rate is 20% and a $20 gain on the investment. At the high interest the investment is attractive, price of bonds is ($80) is low.

If however interest falls to 5% for the same bond. It will now have a face value of $95 (price rises) and a gain of $5 (interest falls).

So an inverse relationship exists between a bond's price and the interest rate.

If interest rates​ rise, bonds become more attractive to​ investors, so bond prices will rise.​ Therefore, when interest rates​ rise, bond prices will also rise. The above statement​ is___________.

Respuesta :

Otras preguntas

If interest rates rise, bonds become more attractive to investors, so bond prices will rise. Therefore, when interest rates rise, bond prices will also rise. The above statement is___________.