What does it mean for a bond's price to decrease when interest rates rise?

When interest rates rise, newly issued bonds typically offer higher returns to attract investors. Consequently, existing bonds with lower interest rates become less attractive in comparison. As a result, the prices of these existing bonds decrease to remain competitive in the marketplace. Investors are more inclined to sell their lower-yielding bonds in favor of new ones that provide better returns, leading to a drop in price for bonds as interest rates increase. This dynamic illustrates the inverse relationship between interest rates and bond prices.