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Test your knowledge
As a rule, what happens to the value of outstanding bonds when interest rates go down?
February 19th, 2026
Answer: It goes up
Bond prices have an inverse relationship with interest rates: when interest rates drop, bond prices rise and when interest rates rise, bond prices drop. That’s why, even though bonds are considered to be a lower-risk investment than stocks (bond issuers guarantee an income and the return of principal at maturity), their value can still fluctuate over time.
To learn more about how the bond market works, read this article.
The following sources were used to prepare this article:
AMF, “Investir dans les obligations.”