The ____ the investor's required rate of return on a bond, the ____ will be the value of the bond to the investor.

Question

Quizplus · Accepted Answer

When the investor's required rate of return on a bond is lower, the value of the bond will be higher for him/her because the expected cash flows from the bond are relatively more attractive. Conversely, when the investor's required rate of return on a bond is higher, the value of the bond will be lower for him/her because the expected cash flows from the bond are relatively less attractive.

The ____ the Investor's Required Rate of Return on a Bond