Multiple Choice
Rosina purchased one 15-year bond at par value when it was initially issued.This bond has a coupon rate of 7 percent and matures 13 years from now.If the current market rate for this type and quality of bond is 7.5 percent,then Rosina should expect:
A) the bond issuer to increase the amount of all future interest payments.
B) the yield to maturity to remain constant due to the fixed coupon rate.
C) to realize a capital loss if she sold the bond at today's market price.
D) today's market price to exceed the face value of the bond.
E) the current yield today to be less than 7 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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