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When the Coupon Rate on Newly Issued Bonds Increases Relative

Question 154

Multiple Choice
When the coupon rate on newly issued bonds increases relative to older, outstanding bonds, what happens?

When the coupon rate on newly issued bonds increases relative to older, outstanding bonds, what happens?


A) The market price of the older bond falls in the secondary market.
B) The market price of the older bond rises in the secondary market.
C) Older bonds can still be sold at their face value.
D) Older bonds will sell for more than their face value.

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