When Interest Rates Rise,bond Values Drop,and When Interest Rates Drop,bond

question 4

Essay

When interest rates rise,bond values drop,and when interest rates drop,bond values rise.Using this inverse relationship,develop a two-part strategy for the bond investor.

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Definitions:

Income Summary

An account used in the closing process that summarizes the revenues and expenses of an accounting period.

Capital

Financial assets or the financial value of assets, such as cash and goods, working capital used in a business by a person, company, or organization.

Income Summary

An account used to summarize the revenue and expenses for a specific period, aiding in the transition to the next accounting period.

Net Loss

The amount by which total expenses exceed total revenues in a given period, indicating a financial loss.