An investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. The investor sold the bond prior to maturity and realized a total return of 6.5%. Which of these most likely occurred while the investor owned the bond? Market interest rates increased. Market interest rates declined. The inflation rate increased. The bond's current yield increased above the bond's coupon rate.
An investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. The investor sold the bond prior to maturity and realized a total return of 6.5%. Which of these most likely occurred while the investor owned the bond? Market interest rates increased. Market interest rates declined. The inflation rate increased. The bond's current yield increased above the bond's coupon rate.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 16P: Interest Rate Sensitivity
A bond trader purchased each of the following bonds at a yield to maturity...
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An investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. The investor sold the bond prior to maturity and realized a total return of 6.5%. Which of these most likely occurred while the investor owned the bond?
Market interest rates increased. | ||
Market interest rates declined. | ||
The inflation rate increased. | ||
The bond's current yield increased above the bond's coupon rate. |
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