What happens to bond prices when interest rates rise?

When interest rates rise, bond prices generally fall. This happens because new bonds are issued with higher interest rates, making them more attractive to investors. If you already own a bond with a lower interest rate, it becomes less valuable compared to these new bonds. For example, if you have a bond paying 3% and new bonds are available at 5%, people will prefer the new ones, so your bond's price will decrease if you try to sell it. Essentially, bond prices and interest rates move in opposite directions, which is an important concept in finance.