How do you decide if a bond fund is a good investment when the price of each share is declining?

I have a family member with a bond fund. She is getting a 5.75% yield (monthly dividend / the value of her holdings for that month) yet she has watched the price of the fund drop from $9.69 (per share) to $9.31. She is concerned that she has reached a point where the investment won't recover (she is retired).
While the yield (monthly dividend) is good, the value of her holdings has dropped $3,000 (due to share price decrease). Since US interest rates aren't rising too my knowledge (Feds keep cutting their rates) why is the price decreasing? Should she bail? If not, why not (she is retired and has a low risk tolerance)

Thanks

Without knowing what the bond fund name (and ticker symbol) is, it's hard to give a good answer. Most of my bond funds - short term corporate, ginnie mae & inflation protected bonds have suffered losses since the fed began raising interest rates a few years ago. Bond fund values fluctuate with interest rates rising & falling.

If your friend can stand no volatility in bond prices, she should be in CDs.

ok, I don't think you know exactly what your talking about...i have a degree in business/finance and bonds don't drop? It sounds like she has stock and the market has went down per share. If this is stock? this is normal the stock market fluctuates because of two many irrational people throwing money at the market. I would have to know how long she has had the stock and who its with and what she bought it at to determine whether or not she should get out of it or not and how much stock she has invested?

I would look at the index that it tracks. If its under performing by a wide margin against the index I would get rid of it. And look at how it has varied over time. If they cant handle the variations maybe this isnt the investment for them.

The NAV on a fund will drop for two reasons. One is fluctuation in the market value of the funds holdings; the other is when the fund makes dividend/capital gains distributions (which are normally reinvested in additional shares).
What you need to watch is the total return of the fund, not the NAV value - its not like a stock. If the one, three, five and 10-year returns are competitive compared to its fund peers, its a good investment. But if she's uncomfortable with that, then the alternate is to move it into cash - either a money market fund or bank CDs.