Question
You expect market interest rates to fall, while the rest of the market believes there will be an increase. Which of the following statements about
You expect market interest rates to fall, while the rest of the market believes there will be an increase. Which of the following statements about fixed-coupon bonds is most correct?
a.
At the maturity date, regardless of changes in market interest rates, a bond price will be equal to the face value plus the coupon.
b.
Bond yields and prices are expected to fall
c.
You should invest in short-term securities rather than long-term bonds.
d.
You should sell your bonds before the drop in interest rates.
e.
As the coupon rate is fixed, the interest rate change will have no impact on the bond.
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