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Options
- A
The market price of the bond going up
-
The market price of the bond going down
Correct answer
- C
The coupon of the bond going up
- D
No change in the market price
Why this is the answer
When market interest rates rise, the value of existing bonds with lower coupons decreases. In this case, since the coupon is lower than the current market rate, the bond's price will fall.
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