when interest rate is high demand for money is low and excess supply leads to purchasing of securities. Now this purchase leads to decrease in interest rate how??
When demand for securities (i.e., bonds) increases, the price increases, so the yield decreases.
What is the relation between increase in pirce and increase in yield?
Take a look at your fixed income: when the price of (normal) bonds increases, the yield to maturity decreases, and vice-versa.
IO bonds
Only at low yields.
correct