Why are bond prices inversely related to interest rates ?

Answer Posted / sivaguru g

As the interest rate increases the price value of bond
decreases. This is due to increase in interest rate
encourage the investors in investing Bank deposits over
which they get return with very minimal risk. Hence the
demand for Bond will come down which leads to decrease in
bond price.

Is This Answer Correct ?    24 Yes 5 No



Post New Answer       View All Answers


Please Help Members By Posting Answers For Below Questions

Explain About Openpages?

591


What is the Liability of Share Holders in Joint Stock Company?

619


What Is Efficient Market Hypothesis?

666


why wns

1446


Tell about the fixed deposits?

613






On what basis do banks offer loans?

588


Do you think insurance companies suffer from risks?

648


What is the scope of finance function?

585


Explain the different types of banking software applications are available in this industry?

587


What do you know about Pay Pal?

655


what is Option trading?

753


Banking sector falls under which sector?

701


What is 'mobile banking'?

743


What is the Full form of SWIFT and what are the features and benefits?

778


How is cash flow statement different from a funds flow statement?

595