A new study called "Financial Capability in the United States 2016" looks at what Americans know and don't know about their financial environment. And what is the one aspect that they understand the least? How the bond market works.
The worst performance for people who took the survey was on a question about how bond prices respond to rising interest rates. Only 28 percent of people in 2015 got that one right.
The correct answer is that bond prices will fall. That’s because interest rates and bond prices move in opposite directions. It’s the primary reason why bond mutual funds, on average, returned a solid 2.6 percent in the second quarter of this year: Falling interest rates drove bond prices higher.