4 Interest Rate on Government Bonds Rising The interest rates on UK and German government bonds have

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4 Interest Rate on Government Bonds Rising The interest rates on UK and German government bonds have risen. For example, the interest rate on 10-year UK government bonds rose above 2.6 per cent today.

Source: Financial Times, 14 August 2013 a What is the relationship between the price of a bond and the interest rate it earns?

b Explain why the interest rates on UK and German bonds have risen.

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Economics

ISBN: 9781118150122

10th European Edition

Authors: Michael Parkin, Dr Melanie Powell, Prof Kent Matthews

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