Explore BrainMass

Explore BrainMass

    Why market price changes with interest rate

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The market price of outstanding issues often varies from par (face value) because ______

    the maturity data has changed, the coupon rate has changed, the market rate of interest has changed, or old bonds sell for less than new bonds

    I believe - the market rate of interest has changed is the answer - please advise answer & why - thanks!

    © BrainMass Inc. brainmass.com March 4, 2021, 6:13 pm ad1c9bdddf

    Solution Preview

    Yes the answer is that the market rate of interest has changed.
    The market price of the bond reflects the required rate of return ...

    Solution Summary

    The solution explains why the market price of outstanding securties changes when interest rates change