Select an option above to see an explanation here.

A) A direct relationship would mean that as interest rates increase, bond prices also increase, which is incorrect. When interest rates rise, bond prices fall.
B) Saying there is no relationship between bond prices and interest rates is incorrect. They are inversely related.
C) Interest rates and bond prices have an inverse relationship: when interest rates rise, bond prices fall; when interest rates fall, bond prices rise.
D) A square relationship suggests that the change in bond prices is proportional to the square of the change in interest rates, which is not accurate.