Investing · Bonds & Interest Rates · Video Lesson
When Yields Rise: Bonds, CDs and Your Savings
When yields rise, savers earn more and existing bonds are worth less. Students price six invented notes against new ones, see why a bond fund can show a loss with no default, and compare the interest a savings account, a CD and a Treasury keep after state tax.
For Teachers
Lesson at a glance
- Topic
- Investing & Interest Rates
- Grade Level
- Grades 9–12 & Adult Ed
- Resource Type
- Video Lesson + Worksheet
- Estimated Time
- 50 minutes
- Format
- Whole class, pairs, individual quiz
- Materials
- Video, printable worksheet with answer key, and a calculator for pages 1 and 2
What Students Learn
Learning objectives
- Explain why the same rise in yields helps savers and costs borrowers, and why the Federal Reserve does not directly set long-term Treasury yields.
- Estimate what an existing note is worth when new notes pay more or less, and explain why more years left to maturity means a bigger change.
- Explain why a bond fund can show a loss when no payment was missed, and how holding a note to maturity differs from selling it early.
- Compare the interest a savings account, a CD and a Treasury bill keep after state income tax, and explain why the highest rate does not always keep the most.
- Match a savings account, a CD and a Treasury to their trade-offs: rate cuts, early-withdrawal penalties, selling at a loss and access for emergencies.
- Describe what a bond ladder and TIPS are for, and how higher Treasury yields reach mortgage rates.
Video Lesson
Watch: When Yields Rise: Bonds, CDs and Your Savings
Video: Money Instructor · Watch on YouTube
Materials
What you’ll need
- Internet access to play the video (9 minutes 11 seconds — the plan plays it once, with one pause)
- Printed copies of the worksheet — the six notes on page 1, the three places to save on page 2, the quiz on pages 3–4, answer key on page 5 for the teacher. Print single-sided, because pages 1 and 2 go out at different times
- A calculator for pages 1 and 2
- Board space for a seesaw sketch — yields on one end, prices on the other — kept up until step 5
Key Terms
Vocabulary
- Treasury note
- U.S. government debt that runs two to ten years and pays interest every six months.
- Treasury bill
- U.S. government debt that runs a year or less, bought for less than it repays.
- Yield
- The return a bond pays for its price, shown as a percent a year.
- Coupon
- The fixed interest a bond pays, set when it is first sold.
- Face value
- The amount a bond repays when it matures — often $1,000.
- Interest-rate risk
- The chance that an existing bond loses market value because new bonds pay more.
- Bond fund
- A fund that holds many bonds and keeps buying and selling them.
- Bond ladder
- A set of bonds bought to mature in different years.
- Maturity
- The end of a bond’s term.
For Teachers
Lesson plan
Estimated time: one 50-minute class period. The six steps below run 42–48 minutes, which leaves the rest of the period for handing out, settling and collecting. Page 2’s last question is homework in every version: hand page 2 back at the bell, after the quiz. In a 45-minute period, set the quiz as homework and run steps 1–5 — they come to 36–41 minutes, and the quiz detaches cleanly because every item is answerable from the video alone. If time runs short inside a 50-minute period, stop after step 5: page 1’s closing box goes home as well, so both closing boxes (12 of the 44 handout marks) are homework, and the quiz opens the next lesson once the handouts are collected. Collect the handouts before the quiz either way.
Before you start: nothing on either handout depends on a real bank, broker, fund or state. Every note, rate and tax rate is invented and printed on the page; the tax rules are the real ones the video describes. Page 1 prices notes with a rough classroom rule, and the page says so. The video’s own figures are dated reporting and stay in the video and the quiz. Nothing on either page tells anyone what to buy or where rates are going.
Supporting every reader: before the video, write the key terms on the board beside the seesaw and say each one aloud; turn on the video’s captions. Read page 1’s rule box aloud and have each pair say the Note A working before anyone writes. Read quiz items aloud for any student who needs it. For developing readers or English learners, give the quiz at the start of the next lesson and allow 10 minutes.
Lesson sequence
- The seesaw (3–4 min). Sketch a seesaw on the board and label one end yields and the other prices. Ask: if new bonds start paying more, would you pay full price for an old one that pays less? Take a show of hands and leave the sketch up; step 5 comes back to it.
- Watch the video once (11–12 min). It runs 9 minutes 11 seconds. Ask students to note who sets the 10-year yield, what each of a savings account, a CD and a Treasury can cost you, and why a bond fund can lose value. Pause at 2:50, where the chapter on a Treasury, a CD or savings starts, and ask: the video says the Fed raised one rate — did it set the one in the headline? Take two answers and play on. These are video notes for the handouts; they are collected before the quiz.
- Sell early or hold? Page 1, in pairs (13–14 min). Hand out page 1 only — the two handouts go out one at a time, in the order they print. Read the rule box together and walk through Note A so every pair can say where the gap comes from. Pairs price Notes B to F, circle each, then work out the fund and circle the note that would lose the most. A calculator helps. Do not say which note drops furthest; the page asks. Then each student writes the closing box (a)–(c) alone.
- Where the interest ends up. Page 2, in pairs (7–8 min). Now hand out page 2 only. The CD row is worked; pairs fill in the other two places, circle the winner in each state, then sort the six statements. The last question (a)–(c) is homework, written alone: page 2 goes back to students at the bell.
- Check both pages, then back to the seesaw (2–3 min). Read out the rough prices of Notes B and F and the State A row from the answer key so students can find their own slip. Then go back to the seesaw on the board: which notes sat on the low end, which on the high end, and which did not move?
- Quiz (6–7 min). Collect pages 1 and 2 and any video notes first, then hand out the separate 13-question quiz on pages 3–4, one point per question. It prints after the handouts and is taken without them, so it checks what students took from the video. The answer key is page 5, for the teacher, and detaches from the back. At the bell, hand page 2 back for its last question.
Activities
- Move the new rate. Pairs redo page 1 as if new notes paid 4% instead, and say which circles change and why.
- Your state. Students find whether their own state has an income tax and say whether they live in State A’s position or State B’s. No figures from home are needed or collected.
Assessment
Students complete the separate 13-question multiple choice quiz, worth one point each, so it is out of 13. Every objective is assessed by at least one quiz item or one handout question. Both handout pages also carry marks of their own, printed on each page and broken down in the answer key. Pricing the notes, the fund and interest kept after tax are weighted onto the handouts rather than the quiz, because they are production rather than recognition tasks. The quiz covers the video; the handouts cover the arithmetic. If you grade only one handout alongside the quiz, make it page 1, which carries the most marks.
Extension
- The market price. For a class that has met discounting, the answer key gives the market price of each note beside its rough price, discounting once a year at 5% as page 1 counts payments. Students check one by hand, then redo it twice a year (2.5% a half-year, as notes really pay) and explain why both move a little less than the rough price.
- One date or a ladder? Students compare a saver who puts an invented sum into one five-year Treasury with one who spreads it over Treasurys maturing in each of the next five years, and list what each can reach without selling in year two.
- Read the source. Students find the Treasury’s own daily yield table online and name the longest and shortest maturity it lists.
Discussion
Discussion questions
- Before the video: if interest rates went up tomorrow, who would be glad and who would not? Think of a saver, a home buyer and someone who already owns a bond.
- On page 1, two notes paid the same coupon but were not worth the same. What would you tell someone who thinks a bond’s price depends only on its coupon?
- The video says a bond fund can show a loss even when every payment is made. Why might that surprise someone who was told bonds are safe?
- On page 2, why might the answer to “which place pays the most?” depend on where you live?
- The video says easy access may be worth more than a slightly better yield. When would that be true for you, and when would it not?
- The video ends by asking which would matter most: locking in a rate, keeping money easy to reach, or protecting it from inflation. Which would you choose, and why?
Printable Worksheet
When Yields Rise: Bonds, CDs and Your Savings — Handouts, Quiz & Answer Key
Two student handouts worth 44 marks, a 13-question multiple choice quiz based on the video worth 1 point each, and an answer key for the teacher — 5 pages. Print single-sided. The PDF is part of Full Membership.
Teacher Notes
Notes for teachers
The article for this video. Our article Interest Rates Just Hit a 24-Year High — Here’s What It Means for Your Money covers the same story for a general reader, with the mortgage example worked out and a short FAQ. It is a good reading for a student who misses the video.
The lessons to pair it with. How Do Bonds Work? introduces face value, coupons and why bond prices move opposite to interest rates; this lesson works that out in dollars. Who Wins When Rates Rise is about where a saver’s cash sits and what inflation takes back; this lesson adds Treasurys and state tax.
Where the video’s figures come from, and why they stay off the handouts. The video, published October 1, 2026 by Money Instructor, reports the September 30, 2026 close of the 10-year Treasury yield and the 30-year and one-year yields from Treasury data, the Federal Reserve’s September 16 decision, that week’s inflation report from the Bureau of Economic Analysis, and a mortgage-rate index for the same day. Those are dated, so they appear in the quiz as the video’s own and nowhere on the handouts. Every note, rate, state and tax rate on pages 1 and 2 is invented. The tax rules — Treasury interest free of state and local income tax, CD and savings interest not — are the real ones the video describes.
The rough price on page 1 is a classroom rule, and the page says so. It prices a note by the interest it falls short of (or beats) a new note over the years it has left. A market price also counts what that interest could earn in the meantime, so real prices move a little less. The notes are chosen so every comparison the page asks about comes out the same both ways; the answer key gives the market figure beside each rough one, for a class that wants to go further. Those discount once a year, as the page counts payments.
What the lesson does not say. It never recommends buying Treasurys, locking in a rate, selling a bond or moving savings, and it never says where rates go next. The video’s own words are that nobody knows that path. Its closing question is about fit: whether the term, access, taxes and risk suit the job the money has to do.
Page 2 uses two invented states. Federal tax is left out, and the page says so. It taxes all three places at one rate, which shrinks every figure, and the figures are chosen so that no federal rate in use changes which place keeps the most. With closer figures it could, because a state tax takes a bigger share of what federal tax leaves; the answer key has an example. A student in a state with no income tax is in State B’s position.
Hand out pages 1 and 2 one at a time. The quiz is pages 3 and 4 and every item is answerable from the video alone — but collect both handouts before it goes out, so it checks what students took from the video and not the pages in front of them. Collect the notes students took during the video as well.
Nobody is asked about their own money. Every note, balance and rate is invented, and each student page says so. No prompt asks what a student or a family saves, owes or invests.
What this lesson deliberately does not do. It does not teach how to buy a Treasury, compare brokers or banks, or read a yield curve, and it does not price a mortgage — the video’s mortgage figures are in the quiz and the article.
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