Bonds with a 6% interest rate were issued when the market rate of interest was 7%.The quoted bond price will be:

Question

Quizplus · Accepted Answer

When the market rate of interest is higher than the bond's interest rate, the bond becomes less attractive to potential buyers, leading to a decrease in demand and a decrease in the bond price. Therefore, the quoted bond price is likely to be less than 100 if the market rate of interest is 7% while the bond's interest rate is 6%.

Bonds with a 6% Interest Rate Were Issued When the Market