If the market price of a bond decreases,then

Name: If the market price of a bond decreases,then
Brand: Quizplus
Rating: 4.8 (48 reviews)

Question

Quizplus · Accepted Answer

When the market price of a bond decreases, its yield to maturity increases. This is because the bond is paying the same fixed interest payments, but is now worth less in the market. Therefore, investors demand a higher yield to compensate for the decreased value of the bond. The coupon rate, on the other hand, does not change with changes in the market price of the bond.

If the Market Price of a Bond Decreases,then