If there is an excess supply of bonds at a given price of bonds,then
A) the interest rate will fall.
B) the interest rate will rise.
C) the price of bonds will rise.
D) the interest rate may rise or the interest rate may fall depending upon the reasons for the excess supply for bonds.

Question

Quizplus · Accepted Answer

When there is an excess supply of bonds at a given price, it means that there are more bonds available than investors are willing to buy at that price. To attract buyers, the price of bonds will have to decrease. When the price of bonds decreases, the interest rate, which moves inversely to bond prices, will rise.

If There Is an Excess Supply of Bonds at a Given