How Are Treasury Bond Prices Affected When the Interest Rate

Multiple Choice

How are Treasury bond prices affected when the interest rate falls?

A) The purchaser of the bond needs to spend less money to obtain a given number of dollars of interest per year, so the price of the bond must decrease.
B) The purchaser of the bond needs to spend more money to obtain a given number of dollars of interest per year, so the price of the bond must increase.
C) The purchaser of the bond needs to spend more money to obtain a given number of dollars of interest per year, so the price of the bond must decrease.
D) The purchaser of the bond needs to spend less money to obtain a given number of dollars of interest per year, so the price of the bond must increase.