Which of the following will decrease if the coupon rate decreases? I. Market Value II. Face...
Which of the following will decrease if the coupon rate decreases?
I. Market Value
II. Face Value
III. Current Yield
IV. Yield-to-Maturity
A) I, II and III only
B) I, III and IV only
C) I and II only
D) I and IV only
Homework Answers
When coupon rate decrease then yield to maturity decreases.
Face value remains same irrespective of increase or decrease in coupon rate.
If coupon rate decreases then market value also decrease
If coupon rate decrease the current yield also decrease.
So correct answer is B) I, III and IV only
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