A bond sells at __________ because interest rates have increased since the bond was originally issued.

Name: A bond sells at __________ because interest rates have increased since the bond was originally issued.
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Question

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When interest rates increase, the value of existing bonds decreases. Investors can earn a higher return on new bonds issued at the higher interest rates, so they are less willing to pay full price for older bonds. As a result, older bonds sell at a discount from their face value, or par value.

A Bond Sells at __________ Because Interest Rates Have Increased