Q610
If market interest rate fall below coupon rate then bond will be sold
A.
below its par value
B.
above its par value
AnswerC.
equal to return rate
D.
seasoned price
Answer: Option B
Solution
Answer: Option B
Solution:
If market interest rate fall below coupon rate then bond will be sold above its par value. The prevailing rate of interest on loans determined by the demand and supply of credit and based on the duration (the longer the duration, the higher the rate) of loan and type of security offered (the higher the quality of security, the lower the rate).