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    Question

    When market interest rates rise, the market price of

    existing bonds:
    A Rises Correct Answer Incorrect Answer
    B Falls Correct Answer Incorrect Answer
    C Remains unchanged Correct Answer Incorrect Answer
    D Becomes zero Correct Answer Incorrect Answer

    Solution

    There's an inverse relationship between bond prices and market interest rates. When rates rise, existing bonds with lower coupon rates become less attractive, causing their prices to fall.

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