Price of an outstanding bond decreases when market rate is

The correct answer is: A. increased

When the market rate increases, the price of an outstanding bond decreases. This is because the bond is now offering a lower interest rate than the current market rate, so investors are not willing to pay as much for it.

The opposite is also true: when the market rate decreases, the price of an outstanding bond increases. This is because the bond is now offering a higher interest rate than the current market rate, so investors are willing to pay more for it.

Here is a more detailed explanation of each option:

• Option B: decreased. This is the correct answer. When the market rate decreases, the price of an outstanding bond increases. This is because the bond is now offering a higher interest rate than the current market rate, so investors are willing to pay more for it.
• Option C: earned. This is not the correct answer. The price of an outstanding bond is not affected by the amount of interest that has been earned on the bond.
• Option D: never changed. This is not the correct answer. The price of an outstanding bond will always change in response to changes in the market rate.