Finance
When interest rates fall, the value of existing fixed-rate mortgage bonds typically:
AFalls as well
BRises, because investors pay more for the higher fixed income stream✓ Correct
CRemains unchanged
DIs determined by the Federal Reserve
Explanation
When market interest rates fall, existing fixed-rate bonds (including mortgage-backed securities) paying higher rates become more valuable because they offer above-market income. Price and yield move inversely.
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