Asked by AZALEA RODRIGUEZ on Apr 25, 2024
Verified
The price of a bond is affected by its interest rate.
Bond Price
The market value of a bond, which can fluctuate based on interest rates, market conditions, and the credit quality of the issuer.
Interest Rate
The percentage charged on a loan or paid on deposits over a specific period, representing the cost of borrowing or the earnings from saving.
- Gain insight into the division and risk assessments of distinct bonds and securities.
Verified Answer
MT
Meera Timilsina8 days ago
Final Answer :
True
Explanation :
The price of a bond is inversely related to interest rates: when interest rates rise, bond prices fall, and when interest rates fall, bond prices rise. This is because the fixed interest payments of a bond become more or less attractive compared to the new rates available in the market.
Learning Objectives
- Gain insight into the division and risk assessments of distinct bonds and securities.