The Statement That "Bond Prices Vary Inversely with Changes in the Market

question 62

Multiple Choice

The statement that "Bond prices vary inversely with changes in the market interest rate" means that if the

• A)market interest rate increases, the contractual interest rate will decrease.
• B)contractual interest rate increases, then bond prices will go down.
• C)market interest rate decreases, then bond prices will go up.
• D)contractual interest rate increases, the market interest rate will decrease.

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