Options
-
Rise
Correct answer
- B
Fall
- C
Remain same
- D
Will be equal to yields
Why this is the answer
When interest rates rise, the price of existing bonds tends to fall. This is because newer bonds offer higher yields, making the older bonds with lower yields less attractive, thus reducing their market value.
Test yourself for real
Take a full NISM Series V-A mock test.
Same duration, same weighting, same difficulty distribution as the real exam — with explanations on every question.