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A firm's bonds mature in 2 2 years and have a coupon rate of 7 . 2 percent. If the market rate of interest increases,

A firm's bonds mature in

22

years and have a coupon rate of

7.2

percent. If the market rate of interest increases, then the:

Multiple Choice

coupon rate will also increase.

current yield will decrease.

yield to maturity will be less than the coupon rate.

market price of the bond will decrease.

coupon payment will increase.

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