Multiple Choice
Assume that market interest rates are 6% and the bondholder receives a $60 coupon payment per year on a perpetuity bond with a face value of $1,000. If market interest rates fall to 4%, the bond price
A) falls to $500.
B) rises to $1,400.
C) rises to $1,500.
D) rises to $2,000.
Correct Answer:
Verified
Correct Answer:
Verified
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