Inverse relationship between bond prices-market rates

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To focus more on interest rates, when it comes to bonds, it is true that there is an inverse relationship between bond prices and market rates. In other words, we would expect for bond prices to increase when market rates/yields decrease and vice versa. To examine this more in depth, what are your thoughts regarding why this occurs? In addition, are there any additional factors that can impact the degree to which a corporation is subject to this type of risk? For example, are bonds with longer or shorter maturities affected by interest rate risk? Are there any specific types of bonds that may not necessarily be "as affected"?

Reference no: EM131212578

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