The 'price effect',with regards to bonds,refers to the:
A)capital gains or losses that occur when interest rates change.
B)relationship between market interest rates and bond prices.
C)present value of interest income and redemption value.
D)relationship between risk and bond prices.

Question

Quizplus · Accepted Answer

The price effect in bonds refers to the capital gains or losses that occur when interest rates change. As interest rates rise, bond prices fall, resulting in a capital loss for bondholders. Conversely, as interest rates fall, bond prices rise, resulting in a capital gain for bondholders.

The 'Price Effect',with Regards to Bonds,refers to The