Bond Pricing
When market interest rates rise, what happens to the prices of existing bonds?
Bond prices and interest rates have an inverse relationship. When market interest rates rise, existing bonds with lower coupon rates become less attractive, causing their prices to fall. Coupon rates on existing bonds ar
Complete Analysis & Legal Rationale
Bond prices and interest rates have an inverse relationship. When market interest rates rise, existing bonds with lower coupon rates become less attractive, causing their prices to fall. Coupon rates on existing bonds are fixed and do not change.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.