IIA
IIA-CFSA · Question #184
As interest rate change, the price of an issued bond also changes. The change in price has an inverse relationship to changes in interest rates (if one rises, the other falls). If new bond issues…
The correct answer is A. The bond is discounted. See the full explanation below for the reasoning.
Question
As interest rate change, the price of an issued bond also changes. The change in price has an inverse relationship to changes in interest rates (if one rises, the other falls). If new bond issues are paying a higher interest rate than existing bonds, investors will not purchase existing bonds unless:
Options
- AThe bond is discounted
- BThe new bond prices fall
- CThe new issue is finished
- DThe interest rate declines
How the community answered
(22 responses)- A73% (16)
- B5% (1)
- C5% (1)
- D18% (4)
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