A company issues a bond with a coupon rate of 5%. Since the bond was issued, market interest rates have decreased. What effect will this decrease have on the bond’s market price and its current yield?
A company issues a bond with a coupon rate of 5%. Since the bond was issued, market interest rates have decreased. What effect will this decrease have on the bond’s market price and its current yield?
| The bond will trade above par and its current yield will decrease. | |
| The bond will trade below par and its current yield will decrease. | |
| The bond will trade above par and its current yield will increase. |
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