What is the relationship between required rate of return and bond price?

The required rate of return and bond price are inversely related. When the required rate of return increases, bond prices typically fall because existing bonds with lower interest rates become less attractive to investors. Conversely, if the required rate of return decreases, bond prices tend to rise as existing bonds with higher interest rates become more appealing. This relationship is fundamental to understanding bond valuation in response to changes in market interest rates.