Question
A company issues a bond with a coupon rate of 5%. Since the bond was issued, market interest rates have decreased. What effect will this
A company issues a bond with a coupon rate of 5%. Since the bond was issued, market interest rates have decreased. What effect will this decrease have on the bond's market price and its current yield?
Question 5 options:
The bond will trade below par and its current yield will decrease.
The bond will trade below par and its current yield will increase.
The bond will trade above par and its current yield will increase.
The bond will trade above par and its current yield will decrease.
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Survey Of Economics, Principles, Applications, And Tools
Authors: Arthur O'Sullivan, Steven M. Sheffrin, Stephen J. Perez
5th Edition
0132556073, 978-0132556071
