If an investor acquires a 10% long-term bond at a price that yields the investor 12%,interest revenue will decrease over the life of the bond.

Question

Quizplus · Accepted Answer

Interest revenue from a bond is determined by the coupon rate and the face value of the bond, not by the yield at which it was purchased. If an investor acquires a 10% bond, the interest revenue will remain constant at 10% of the bond's face value, regardless of the yield (12% in this case) at which the bond was purchased.

If an Investor Acquires a 10% Long-Term Bond at a Price