The value of a bond investment,which provides fixed interest payments,will increase when discounted at an 8% rate rather than at an 11% rate.

Question

Quizplus · Accepted Answer

When the discount rate decreases, the present value of future cash flows (interest payments and principal) increases, leading to an increase in the value of the bond. Therefore, the bond investment will increase in value when discounted at a lower rate of 8% compared to 11%.

The Value of a Bond Investment,which Provides Fixed Interest Payments,will