Question
You've decided you want to sell a bond before its maturity date. Interest rates are currently higher than when you bought the bond. What will you likely have to do to make your bond more appealing to investors?
A.
Lower the interest rate
B.
Sell your bond at a discounted price
C.
Increase the interest rate
D.
Sell your bond at a higher price
A.
Lower the interest rate
B.
Sell your bond at a discounted price
C.
Increase the interest rate
D.
Sell your bond at a higher price
Answers
GPT-4o mini
To make your bond more appealing to investors when interest rates are higher than when you bought the bond, you will likely have to **B. Sell your bond at a discounted price**.
When market interest rates rise, existing bonds with lower interest rates become less attractive, so selling your bond at a discount can entice buyers to purchase it despite the lower interest payments compared to new bonds.
When market interest rates rise, existing bonds with lower interest rates become less attractive, so selling your bond at a discount can entice buyers to purchase it despite the lower interest payments compared to new bonds.