Interest rates and the price of old or existing bonds are Group of answer choices There is not enough information to answer the

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Interest rates and the price of old or existing bonds are Group of answer choices There is not enough information to answer the

question. sometimes directly related and sometimes inversely related. independent of each other. inversely related. directly related.

Business

1 answer:

Zielflug [23.3K] · Answer 1 · 2022-10-06T00:05:56+03:00

Answer:

inversely related.

Explanation:

A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.

An interest rate can be defined as an amount of money that is charged as a percentage of the total amount of money borrowed or securities purchased from an individual or a financial institution.

Generally, there exist an inverse relationship between bonds and interest rates.

Interest rates and the price of old or existing bonds are inversely related. Thus, an increase in the interest rate (cost of borrowing an amount of money rises) causes a fall or decrease in the price of bonds.