Last year,Theo purchased a fixed-rate,7-year bond at par that has a coupon rate of 6.5 percent.If the current market rate for this type and quality of bond is 6.8 percent,then he should expect

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When market rates increase, the value of fixed-rate bonds decrease, as investors seek higher yields. Therefore, if Theo were to sell the bond in the current market, he would likely receive a price below the bond's face value, resulting in a capital loss. The bond's yield to maturity would also increase as a result of the market rate increase, making the bond less attractive to potential buyers. The bond's interest payments, however, would remain the same as they are fixed at the coupon rate. The current yield may be less than 6.5 percent if the bond is selling below face value, resulting in a higher yield for the purchaser.

Last Year,Theo Purchased a Fixed-Rate,7-Year Bond at Par That Has