DLQ Inc. bonds mature in 12 years and have a coupon rate of 6 percent. If...
DLQ Inc. bonds mature in 12 years and have a coupon rate of 6 percent. If the market rate of interest increases, then the
| Coupon rate will also increase. |
| Current yield will decrease. |
| Yield to maturity will be less than the coupon rate. |
| Market price of the bond will decrease. |
| Coupon payment will increase. |
Homework Answers
Since, coupon rates are constant, market interest rates and prices will have inverse relationship. If the market interest rate decreases bond price will increase and if the market interest rates decrease bond prices will decrease.
Hence, correct option is Market price of the bond of the bond will decrease.
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