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# Bond market interest rates

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7 As bond market interest rates increase, the value (i.e., price) of a fixed coupon interest rate bond (i.e., a typical corporate bond)
a. does not change
b. increases
c. decreases
d. insufficient information to answer this question
e. None of the above or insufficient information

8 In an efficient capital market
a. studying past prices will help you earn above average returns on stock investments
b. all security investments are positive NPV investments.
c. securities are relatively fairly priced based on the information available to all investors
d. above normal returns can not be earned
e. None of the above or insufficient information

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7 As bond market interest rates increase, the value (i.e., price) of a fixed coupon ...

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Response discusses bond market interest rates

\$2.19
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## Calculate the Price of a Bond Given Various Interest Rates

A bond has a face value of \$100, a coupon rate of 8% and 5 years to redemption at par. The annual interest payment has just been made.
(a) What is the price of the bond if market interest rates are;
(i) 6%
(ii) 7%
(iii) 8%
(iv) 10%

(b) What is the duration of the bond if market interest rates are 7%?

(c) What will be the change in value of the bond for a 1% change in market interest rates?

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