If market interest rates have increased since a company last borrowed long-term funds, the market value of these already borrowed long-term funds will likely be:

Question

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If market interest rates have increased since a company last borrowed long-term funds, the market value of these already borrowed long-term funds will likely be less than their book value. This is because the market interest rate is now higher than the interest rate the company is paying on the borrowed funds, so the market perceives the bonds as being less valuable.

If Market Interest Rates Have Increased Since a Company Last