Question
QUESTION 12 Assuming the day after the bond is sold, the yield to maturity inceases from 7% to 9%. What will happen to the price
QUESTION 12
Assuming the day after the bond is sold, the yield to maturity inceases from 7% to 9%. What will happen to the price of the bond? Why?
| a. | It will rise; the bond price is a function of (Kd) where Kd = Market Interest Rate. | |
| b. | It will fall; the bond price is a function of (1/Kd). | |
| c. | It will not change; the bond price is not a function of (Kd). |
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Financial Markets And Institutions A Modern Perspective
Authors: Anthony Saunders, Marcia Millon Cornett, Marcia Cornett
2nd Edition
007294109X, 978-0072941098
