Discuss the relationship between bond prices and interest rates. What impact do changing interest rates have on the price of long-term bonds versus short-term bonds?© BrainMass Inc. brainmass.com June 23, 2018, 2:44 am ad1c9bdddf
The relationship between the bond prices and the interest rate is inverse. Thus if there is decline in the interest rate it leads to increase in the bond prices and vice versa.
As the interest rate goes up, the price of the bond decreases. At a 12% interest rate, the bond is valued exactly ...
The relationship between bond prices and interest rates is solidified.