An investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. The investor sold the bond prior to maturity and realized a total return of 6.5%. Which of these most likely occurred while the investor owned the bond? Market interest rates increased. Market interest rates declined. The inflation rate increased. The bond's current yield increased above the bond's coupon rate.
An investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. The investor sold the bond prior to maturity and realized a total return of 6.5%. Which of these most likely occurred while the investor owned the bond? Market interest rates increased. Market interest rates declined. The inflation rate increased. The bond's current yield increased above the bond's coupon rate.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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An investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. The investor sold the bond prior to maturity and realized a total return of 6.5%. Which of these most likely occurred while the investor owned the bond?
Market interest rates increased. | ||
Market interest rates declined. | ||
The inflation rate increased. | ||
The bond's current yield increased above the bond's coupon rate. |
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