Assume an investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. Further assume the investor sold the bond prior to maturity and realized a total return of 7.1%. Which of these most likely occurred while the investor owned the bond?
A) the inflation rate increased.
B) the bond's current yield increased above the bond's coupon rate.
C) market interest rates increased.
D) new bonds with similar characteristics have coupon rates of 6.5%.
Answer: D) new bonds with similar characteristics have coupon rates of 6.5%.
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