When Interest Rates in the Bond Market Go Up

question 290

Multiple Choice

When interest rates in the bond market go up

• A) there is no impact on the price of existing bonds.
• B) the price of existing bonds goes up.
• C) the price of stocks goes up.
• D) the price of existing bonds goes down.

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Definitions:

Fixed Cost

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums, remaining constant regardless of business activity levels.

Production Level

The quantity of items manufactured or produced in a given period, impacting costs, inventory, and capacity planning.

Step-Wise Variable Cost

A cost that remains fixed within a certain level of activity but will jump to a higher amount at a certain point due to increased activity.

Variable Costs

Costs that change in proportion to the level of activity or production volume.