Question
You expect market interest rates to increase, while the rest of the market believes there will be a decrease. Which of the following statements about
You expect market interest rates to increase, while the rest of the market believes there will be a decrease. Which of the following statements about fixed-coupon bonds is most correct?
a. You should invest in short-term securities rather than long-term bonds
b. At the maturity date, just before the last payment is made, the bond will be trading at a discount.
c. Bond yields and prices are expected to rise
d. As the coupons are fixed, the interest rate change will have no impact on the bond.
e. You expect the company to increase the coupon payment in response to the increase in market rates.
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