A government securities dealer buys a 12 year Treasury bond with a 9 percent coupon rate at par ($1000). New bonds with comparable terms rise to 11 percent. What will happen to the 9 percent bond's market price? What price will it approach? Answer these same questions in the case where bond rates decline to 7 percent. Explain the price changes you have calculated.

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The Answer of A government securities dealer buys a 12 year Treasury bond with a 9 percent coupon rate at par ($1000). New bonds with comparable terms rise to 11 percent. What will happen to the 9 percent bond's market price? What price will it approach? Answer these same questions in the case where bond rates decline to 7 percent. Explain the price changes you have calculated.

A Government Securities Dealer Buys a 12 Year Treasury Bond