When Interest Rates Rise, the Value of Long-Term Bonds

question 67

Multiple Choice

When interest rates rise, the value of long-term bonds

• A)remains the same.
• B)rises.
• C)falls.
• D)rises at diminishing rates.

---

Definitions:

Interest Rate

The price, shown in the form of a percentage of the principal, charged by lenders to borrowers for asset employment.

Diversify

The attempt to spread investment risk by selecting a variety of investment options within a portfolio.

Adage

A short, pointed and memorable saying that expresses a truth or insight.

Private Saving

The portion of an individual's or household's income that is not spent on consumption or taxes and is instead set aside for future use.