When market interest rates exceed the coupon rate of a MBB,the price of the bond will be greater than its par value.

Question

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When market interest rates exceed the coupon rate of a MBB (Municipal Bond Buyer Index), the price of the bond will decrease below its par value. This is because investors can earn a higher rate of return by buying newly issued bonds with higher coupon rates, which decreases interest in existing bonds with lower coupon rates, resulting in a decrease in their price.

When Market Interest Rates Exceed the Coupon Rate of a MBB,the