Answer: Option D
Answer: (d)
A bond (debt paper) holder is expected to get a fixed interest regularly and principal at maturity.
But if the inflation in the economy starts increasing the price of the bond decreases (because now the actual value of the principal and interest which the bondholder will get will be of less value) and bondholders lose.
When the price of the bond decreases in the market, the person who will purchase the bond will have to pay less price and hence he will get more return/yield.
(The interest rate on the bond remains fixed but its price fluctuates in the market and hence the return also fluctuates.
If the market price of the bond is low, then the return/yield on the bond will be high.
This is because the person who will purchase the bond will have to pay less price to get the same bond).
For a detailed understanding, you can refer to the book on Indian Economy by Vivek Singh.