After bonds have been issued,their market value can be expected to:
A)Rise as any premium is amortized.
B)Fall if interest rates rise.
C)Fall as any discount is amortized.
D)Rise if interest rates rise.

Question

Quizplus · Accepted Answer

When interest rates rise, the market value of existing bonds falls because newer bonds will have higher yields, making the previously issued bonds less attractive. Conversely, if interest rates fall, the market value of existing bonds will generally rise because those bonds are now more attractive in comparison to new bonds with lower yields. Amortization of discounts or premiums will affect the book value of bonds but not necessarily the market value.

After Bonds Have Been Issued,their Market Value Can Be Expected