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?

Question

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

Answer 1

If interest rates are currently higher than when you bought the bond, your bond's fixed interest payments are less attractive compared to new bonds being issued at the higher rates. To make your bond more appealing to investors, you would likely have to:

B. Sell your bond at a discounted price

Selling it at a discount would make the yield on your bond more competitive with the new, higher-interest bonds available in the market.