Question
43. Which of the following statements regarding bond pricing is true? A)The lower the discount rate, the more valuable the coupon payments are today. B)Bonds
43. Which of the following statements regarding bond pricing is true?
A)The lower the discount rate, the more valuable the coupon payments are today.
B)Bonds with high coupon payments are generally (all else the same) more sensitive to changes in interest rates than bonds with lower coupon payments.
C)When market interest rates rise, bond prices will also rise, all else the same.
D)Bonds with short maturities are generally (all else the same) more sensitive to changes in interest rates than bonds with longer maturities.
E)All else the same, bonds with larger coupon payments will have a lower price today.
Answer: A
can somebody explain why A is the true answer?
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