To sell an old bond when rates have risen,the holder will have to discount the bond until the yield to the buyer is the same as the market rate.

Question

Quizplus · Accepted Answer

When market interest rates rise, the value of existing bonds decreases, as newer bonds with higher rates become more attractive to investors. In order to sell an old bond in this scenario, the holder will have to offer a lower price (discount) to the buyer until the yield to the buyer equals the market rate. Therefore, the statement is true.

To Sell an Old Bond When Rates Have Risen,the Holder