price of a bond when interest rates in the economy increase
Not what you're looking for? Search our solutions OR ask your own Custom question.
What happens to the price of a bond that pays a fixed percent of the face value every year when interest rates in the economy increase.
© BrainMass Inc. brainmass.com December 24, 2021, 7:24 pm ad1c9bdddfhttps://brainmass.com/economics/bonds/price-of-a-bond-when-interest-rates-in-the-economy-increase-185556
Solution Preview
The fixed payment made to the bondholders is called coupon rate. The investors of bond expect to receive a yield on these bonds, which is same as the interest rate on the bond with similar risk. This yield is received by the bondholders in two forms - through coupon payments and through appreciation of the bond price. Since ...
Solution Summary
Address a conceptual question about bond valuation and analysis with example. (234 words)
$2.49