Series 6: 4.2.6. Interest Rates And Bond Prices

Taken from our Series 6 Online Guide

4.2.6. Interest Rates and Bond Prices

As interest rates rise, the prices of bonds decline in the secondary market because investors can invest their money in higher paying new issues. This is considered market risk for bond investors. Market risk is greater for long-term bonds than short-term bonds because there is more opportunity for interest rates to rise over the bond’s life. To reduce market risk, investors could invest in short-term bonds over long-term bonds because when interest rates rise, the prices of long-term bonds fall faster than the prices of short-term bonds.

Sensitivity to intere

Since you're reading about Series 6: 4.2.6. Interest Rates And Bond Prices, you might also be interested in:

Solomon Exam Prep Study Materials for the Series 6
Please Enable Javascript
to view this content!