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What is the relationship between the price of bonds and interest rates. What is the yield...

What is the relationship between the price of bonds and interest rates. What is the yield of the bond?

Explain in detail what happens when the Fed increases the money supply? You should be able to graph that as well.

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1) The price of bonds and interest rates are inversely related. When new bonds are issued, they typically carry coupon rates at or close to the prevailing market interest rate. Interest rates and bond prices have an inverse relationship; so when one goes up, the other goes down and vice versa.

Yield is the annual return earned on the price paid for a bond. It is calculated by dividing the bond's coupon rate by its purchase price. The higher a bond's price, the lower its yield.

answered by: anonymous
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