The bond was held in his brokerage account electronically, so he did not think about it on a daily basis. On 2012, he thought about selling the bond on the secondary market to help pay for his school tuition. At that time, interest rates had climbed to 6.5%. This was great news for Andrew because now he could sell his bond for more than the principal amount he would receive in 2020.

Question

Quizplus · Accepted Answer

When interest rates rise, the price of existing bonds typically falls. Therefore, if interest rates climbed to 6.5%, Andrew would likely have to sell his bond for less than its principal amount, not more.

The Bond Was Held in His Brokerage Account Electronically, So