Question
When overall interest rates rise (to 10%), the bond you already own (with 5% coupon rate) becomes___ valuable to potential buyers, so its price will ___
2. When overall interest rates fall (to 2%), the bond you already own (with 5% coupon rate) becomes __ valuable to potential buyers, so its price will___
3. Generally, the longer the duration of the bond, the____ the chance the bond price may change due to changes in yield.
more less higher increase decrease.
2. When overall interest rates fall (to 2%), the bond you already own (with 5% coupon rate) becomes __ valuable to potential buyers, so its price will___
3. Generally, the longer the duration of the bond, the____ the chance the bond price may change due to changes in yield.
more less higher increase decrease.
Answers
GPT-4o mini
1. When overall interest rates rise (to 10%), the bond you already own (with a 5% coupon rate) becomes **less** valuable to potential buyers, so its price will **decrease**.
2. When overall interest rates fall (to 2%), the bond you already own (with a 5% coupon rate) becomes **more** valuable to potential buyers, so its price will **increase**.
3. Generally, the longer the duration of the bond, the **higher** the chance the bond price may change due to changes in yield.
2. When overall interest rates fall (to 2%), the bond you already own (with a 5% coupon rate) becomes **more** valuable to potential buyers, so its price will **increase**.
3. Generally, the longer the duration of the bond, the **higher** the chance the bond price may change due to changes in yield.