If the market yields decrease shortly after the T-bond is issued, what happens to the price of the bond?
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A 10-year corporate bond is issued with a face value of $100,000, paying interest of $2,500 semi-annually. If market yields decrease shortly after the T-bond is issued, what happens to the bonds:
a. price?
b. coupon rate?
c. yield to maturity?
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Solution Summary
This solution uses step by step calculations to determine the price, coupon rate, and yield to maturity of the bond if the market yields decrease.
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b. The coupon rate is unaffected; the coupon rate is based on the principal of the loan and ...
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