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.

---

Definitions:

Substitute Goods

Products or services that can be used in place of each other. When the price of one falls, the demand for the other falls, and conversely with an increase of price.

Equilibrium Price

Equilibrium Price is the price point at which the quantity of goods supplied equals the quantity of goods demanded in a market.

Equilibrium Quantity

The quantity of goods or services supplied is equal to the quantity demanded at the market price.

Water Ski Boats

Boats specifically designed and equipped to create a wake suitable for water skiing and other water sports.