If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond with a fixed interest rate?
A)The value of the bond will increase.
B)The bond is worthless.
C)The value of the bond will decrease.
D)The value of the bond will not change.
E)It is impossible to determine if the bond's value will increase or decrease.

Question

Quizplus · Accepted Answer

If interest rates in the overall economy decrease, the fixed interest rate offered by the corporate bond becomes relatively more attractive to investors. As a result, the market value of the bond will increase.

If Interest Rates in the Overall Economy Decrease, What Will