BOND YIELD

PRACTICE QUESTION

Q. Consider the following statements:

1. Falling interest rates make bond prices rise and bond yields fall.

2. Economic conditions that might decrease bond yields include high rates of unemployment and slow Economic Growth or Recession.

Which of the above statements is/are incorrect?

(a) Only 1

(b) Only 2

(c) Both 1 and 2

(d) Neither 1 nor 2

Correct Answer: (d) Neither 1 nor 2