ଭାଗିଦାରୀ ଧ୍ୱନି

This inverse relationship is the most important thing in bonds. An old bond gives five percent interest, while new bonds give seven percent interest. Your five percent bond becomes less attractive, so the price falls. Bond prices move due to interest rate changes, inflation, and credit risk. Higher inflation makes bonds less valuable, and risky issuers cause bond prices to drop.