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    A firm issues a bond at par value

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    A firm issues a bond at par value. Shortly thereafter, interest rates fall. If you calculated the coupon rate, coupon yield, and yield to maturity for this bond after the decline in interest rates, which of the three value would be highest and which would be lowest? Explain.

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    Solution Preview

    When interest rate falls after a bond at par value has already been issued, the bond's price will rise. The coupon rate would not change because the initial rate issued when the contract was made remain static for the entire duration of the bond. The ...

    $2.19

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