Regardless of the size of the coupon payment,the price of a bond moves in the opposite direction from interest rate movements.For example,if interest rates rise,bond prices fall.

Question

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This statement is true according to the fundamental bond valuation principle. As interest rates rise, the fixed coupon payments on existing bonds become comparatively less attractive to potential buyers, leading to a drop in bond prices. Conversely, when interest rates fall, the demand for existing bonds may increase, resulting in higher prices.

Regardless of the Size of the Coupon Payment,the Price of a Bond