If market interest rates fall after a bond is issued:
A)the face value of the bond increases.
B)the present value of the bond decreases.
C)the market value of the bond increases.
D)the coupons of the bond decrease.

Question

Quizplus · Accepted Answer

When market interest rates fall, the present value of a bond's future cash flows (coupons and face value) increases, leading to an increase in the bond's market value.

If Market Interest Rates Fall After a Bond Is Issued