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What Happens to the Coupon Rate of a $100 Face

Question 41

Multiple Choice

What happens to the coupon rate of a $100 face value bond that pays $7 coupon annually,if market interest rates change from 8 to 9%? The coupon rate:

A) increases to 8%.
B) increases to 9%.
C) remains at 7%.
D) increases to nearly 9%.

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