Other things being equal, a rise in the price level will imply in wealth for the bondholder and
In the wealth of the issuer of the bond.
A) a decline; an increase
B) a decline; a decline
C) a decline; no change
D) an increase; a decline
E) an increase; an increase

Question

Quizplus · Accepted Answer

A rise in the price level decreases the real value of money, which reduces the real wealth of bondholders as the purchasing power of the bond's fixed payments declines. For the issuer, the real burden of repaying the bond decreases, effectively increasing their wealth.

Other Things Being Equal, a Rise in the Price Level