Question

21.If the market interest rate falls, bond priceswill _____ .a.fall b.remain unchanged c.rised. d. fluctuate violently

21.If the market interest rate falls, bond priceswill _____

.a.fall

b.remain unchanged

c.rised.

d. fluctuate violently

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Answer #1

Answer:

Option c: Rised

Explanation:

If market interest rates fall, the interest rate of the bond will be higher than the market interest rate.

People would like to buy the company's bond, the demand would increase, and so the bond prices will increase.

There is an inverse relationship between market interest rate and bond prices.

Hence, option 'c' is correct, and rest all are incorrect.

In case of any doubt or clarification, feel free to come back via comments.

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