Treasury bond prices rose on Monday, pushing yields down for the sixth session in seven, as the lack of major data and low trading volumes gave traders little fodder. Yields on 10-year bonds, which move inversely to prices, fell 4 basis points to 1.65%. They haven't closed below that level since August 13. A basis point is one one-hundredth of a percentage point.
Source: The Wall Street Journal, August 27, 2012
a) The news clip calls the percentage return or interest rate on a security the "yield." What is the relationship between the price of a treasury bond and its interest rate? Why does the interest rate move inversely to price?
b) What can you say about the relationship between the price of a treasury bond at the date of the news clip and on August 13?