TOAP UITF Certification Program Qualifying Exam Practice Questions - TOAP Unit Investment Trust Fund (UITF) Certification Program Qualifying Exam

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Which of the following describes the relationship between prevailing market interest rates and the market price of outstanding fixed-rate bonds?

They move in the same direction; when market interest rates rise, bond prices also rise. They move in opposite directions; when market interest rates rise, bond prices fall. They are completely independent; market interest rates have no impact on the price of outstanding bonds. They are positively correlated only if the bond's remaining maturity is less than one year.

Correct Answer:

They move in opposite directions; when market interest rates rise, bond prices fall.

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