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. Bond yields and prices are expected to rise
b. You should invest in long-term bonds rather than short-term securities
c. As the coupons are fixed, the interest rate change will have no impact on the bond.
d. You expect the company to increase the coupon payment in response to the increase in market rates.
e. At the maturity date, regardless of changes in market interest rates, a bond price will be equal to the face value plus the coupon.
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