If the ytm of a bond falls, which of the following is most valid?
A) The bond price rises.
B) The bond price falls.
C) The bond price may rise or fall, depending on the maturity of the bond.
D) Not enough information to answer the question.

Question

If the ytm of a bond falls, which of the following is most valid? 
A) The bond price rises.
B) The bond price falls.
C) The bond price may rise or fall, depending on the maturity of the bond.
D) Not enough information to answer the question.

Quizplus · Accepted Answer

When the yield to maturity (ytm) of a bond falls, it means its interest rate becomes more attractive than the prevailing rates, which makes it more valuable. Therefore, investors will pay more for the bond, leading to a rise in its price.

If the Ytm of a Bond Falls, Which of the Following