n NISM Certifications
XVII NISM Series XVII
Medium

When interest rates in the economy increase, the market value of existing rate-sensitive instruments will generally decrease due to inverse relationship.

Practice question from NISM Series XVII- Retirement Adviser Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Go up

  2. Go down

    Correct answer

  3. C

    Can either go up or down depending on foreign exchange situation

  4. D

    No effect of interest rates

Why this is the answer

Rising interest rates reduce the market value of fixed-rate securities.

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