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Q » What is the relationship between bond prices and interest rates?
17 Oct, 2025
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A » The relationship between bond prices and interest rates is inverse: when interest rates rise, bond prices fall, and vice versa. This occurs because new bonds issued at higher rates make existing bonds with lower returns less attractive, thus reducing their market price. Conversely, when rates drop, existing bonds with higher rates are more desirable, increasing their price. Understanding this dynamic is crucial for investors managing bond portfolios.
17 Oct, 2025
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