Banking · Treasury & Investment Management
Treasury dealers in banks actively manage the investment portfolio because changes in bond yields affect market value. When interest rates rise sharply, the immediate effect on the price of existing fixed-rate bonds is generally:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1a fall in bond prices✓
- 2compulsory conversion into floating-rate instruments
- 3a rise in bond prices
- 4no effect because coupon is fixed
Correct answer
a fall in bond prices
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