Question: There is an inverse relationship between interest rate changes and changes in the market price of outstanding bonds. Explain the logic behind this principle. Given

There is an inverse relationship between interest rate changes and changes in the market price of outstanding bonds. Explain the logic behind this principle. Given this relationship, do you believe it is currently a good time to buy bonds? Why or why not?

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Solution When a Company issue new Bond it keeps interest rates on the Bond close to the prevailing market rates So Investors get equal benefit by investing in bonds which they can get by investing in ... View full answer

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