Question

What will happen to the market value of a bond if interest rates decrease?

a. The market value will decrease
b. The market value will increase
c. The market value will increase or decrease, depending on the general economic climate
d. The market value should remain level

Answer 1

b. The market value will increase

Step-by-step explanation:

In the case when the rate of the interest decrease so the market value of the bond would be increased. As the market value of the bond and the rate of interest has an inverse relationship between them. In the case when the rate of interest increased than the market value of the bond decreased and vice versa

Therefore option b is correct