Question: Why do bond prices go down when interest rates go up?

Why do bond prices go down when interest rates go up?

Step by Step Solution

★★★★★

3.44 Rating (167 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Other things consistent if bond rate yield to Maturity goes up than the bond price goes ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Excel file Icon

68-B-C-F-B-V (32).xlsx

300 KBs Excel File

Students Have Also Explored These Related Corporate Finance Questions!

Q:

Why do bond prices go down when interest rates go up? Dont lenders like high interest rates?

Q:

Why do bond prices vary inversely with interest rates?

Q:

Why bond prices and interest rates are inversely related?

Q:

1. Which one of the following statements is NOT true? A) Prices in the corporate bond market tend to be more volatile than the markets for stocks or money market securities. B) Corporate bonds are...

Q:

If everyone in the market expects inflation to decrease, we can be certain that which of the following will be true? Bond prices will increase and interest rates will go down. Bond prices will...

Q:

Suppose $10,000 in new dollar bills (never seen before) falls magically from the sky into the hands of Joanna Ferris. What minimum increase and what maximum increase in the money supply may result?...

Q:

Please show work clearly and neat and circle answer. Answer 20-24 20. Which occurs more often? 5 A. Upwardly Sloping Yield Curves B. Inverted Yield Curves 21. What is an Inverted Yield Curve? erm US...

Q:

Please show work clearly and neat and circle answer. Answer 21-24 21. What is an Inverted Yield Curve? A. Short-Term US Treasuries (e.f. 1-year Treasury bills) have higher treasury mty CrTMs) than...

Q:

1. Which, if any, of the following statements are false? A. For a given coupon rate, the sensitivity of bond prices to changes in interest rates increases at an increasing rate as maturity increases....

Q:

Which statement best describes the relationship between prevailing (market) rates of interest and bond prices: Multiple Choice As interest rates fall, bond prices fall. As interest rates rise, bond...

Q:

The following data (stored in Drink) represent the amount of soft drink in a sample of 50 consecutively filled 2 liter bottles. The results are listed horizontally in the order of being filled: a....

Q:

To qualify for a Masters degree program in Electronics Engineering at Ateneo de Manila University, candidate must score in the top 20% on a mental ability test. The test has a mean of 180 and a...

Q:

Verify if driver is authentic. Prevent the same driver from being selected twice during the same period Allow for driver suggestions. Perform background check on both driver and customer Keep track...

Q:

Explain what is meant by the term revenue expenditure.

Q:

Using the format provided, for each account identify (1) whether the account is a balance sheet (B/S) or an income statement (I/S) account; (2) whether it is an asset (A), a liability (L), an owners...

Q:

The income statement for Joes Asphalt, Inc., for the year ended December 31, 2012, is as follows: Dividends of $36,000 were paid on December 30, 2012. Required: 1. Give the entry required on December...

Q:

The income statement for Jiff y Woodworkers Inc., for the year ended December 31, 2012, is as follows: Dividends of $24,800 were paid on December 30, 2012. Required: 1. Give the entry required on...

Q:

Please answer with explanation 3. Obtain the Maxterm list for f(A,B,C,D)=ABC+AB+ACD

Q:

36. Donaldson Manufacturing Company's production budget requires the following units for the upcoming year: 1st quarter 2nd quarter 3rd quarter 4th quarter 4,000 units 3,500 units 3,000 units 5,000...

Q:

To study the effects of prenatal cocaine use on infants, on collects a random sample of 65 weights of babies born to cocaine users that gives a mean of 27'50 g and a standard deviation of 630 g. Use...