The Federal Reserve has kept its target interest rate near zero to help support the economy since the pandemic hit in March 2020. As the economy recovers and strengthens, market observers expect the Federal Reserve to start raising interest rates. In this portion (questions 6 to 9), we explore how those upcoming rate hikes may affect other interest rates in the economy as well as the prices of stocks and existing bonds.

Briefly describe two types of interest rates and explain how they are affected by the Fed's rate hikes.