Question
A corporate bond is sold for $1,000 (par value) with a 6% coupon. Shortly thereafter interest rates in the economy (the nominal rate of interest)
A corporate bond is sold for $1,000 (par value) with a 6% coupon. Shortly thereafter interest rates in the economy (the nominal rate of interest) increases to 8% due to inflation worries
Given this scenario (all other things being equal), which of the following bond valuations for this bond in the secondary market would most likely happen: $1,000; $1.080, $1,196, or nothing given the choices?
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Fundamentals of Investments
Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey
3rd edition
132926172, 978-0132926171
