Purchase Solution

price of a bond when interest rates in the economy increase

Not what you're looking for?

Ask 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.

Purchase this Solution

Solution Summary

Address a conceptual question about bond valuation and analysis with example. (234 words)

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 ...

Purchase this Solution


Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.