Question

If the fed buys more bonds from the public, and increases the price it is willing to pay for the bonds, what will happen to interest rates?

Answer 1

If the fed buys more bonds from the public, and increases the price it is willing to pay for the bonds. Interest rates will rise.

A bond is a sort of security used in finance where the issuer owes the holder a debt and is required, depending on the terms, to repay the principal and interest on the bond at the maturity date. Interest is often paid at regular intervals.

An IOU-like debt security called a bond. Bonds are issued by borrowers to attract capital from investors ready to extend a loan to them for a specific period of time. When you purchase a bond, you are making a loan to the issuer, which could be a corporate, government, or municipality.

Learn more about Bonds here

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