When the coupon rate on newly issued bonds decreases relative to older, outstanding bonds, what happens?
A) The market price of the older bond falls in the secondary market.
B) The market price of the older bond rises in the secondary market.
C) Older bonds can still be sold at their face value.
D) Older bonds will sell for more than their face value.
Answer: B
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Suppose the Fed purchases Treasury securities. Interest rates in the United States will ________ and the U.S. dollar will ________ against foreign currencies
A) decrease; depreciate B) increase; depreciate C) decrease; appreciate D) increase; appreciate
In the long run, the number of firms in an industry may change. If the number of firms increases, then
A) the supply curve will shift outward to the right. B) the demand curve will shift outward to the right. C) the supply curve will shift inward to the left. D) the demand curve will shift inward to the left.