If the coupon payment were to increase, the ________ value of the bond would also increase.

Question

Quizplus · Accepted Answer

The market value of a bond is determined by the interest rate environment at the time of issuance, so if the coupon payment were to increase, the bond would become more attractive to investors and demand for the bond would increase, leading to an increase in the market value. The par value of a bond is a constant value, while the face value represents the principal amount that will be paid back at maturity and is also a constant value. The call value and stated value are not relevant to this scenario.

If the Coupon Payment Were to Increase, the ________ Value