When the interest rate on a bond is below the equilibrium interest rate, there is excess supply in the bond market and the interest rate will rise.
More about bonds and interests:
In essence, owning a bond is similar to having a stream of future cash payments. The majority of the time, such cash payments come in the form of monthly interest payments and the return of principal when the bond matures.
Interest rate risk is the chance that the price of a bond will vary as a result of shifting market interest rates. Different bonds may be impacted differently by shifts in short-term versus long-term interest rates.
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