A Wesfarmers bond is $100 and entitles the owner to receive $2 per year, giving an interest rate of 2 per cent. If the price of the bond falls to $50 what happens to the interest rate?
A) It rises to 8 per cent.
B) It falls to 1 per cent.
C) It falls to 0.4 per cent.
D) It stays the same.
E) It rises to 4 per cent.
Correct Answer:
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