When bond prices become more volatile, the demand for bonds ________ and the interest rate ________. Group of answer choices decreases; rises decreases; falls increases; rises increases; falls

When bond prices become more volatile, the demand for bonds and the interest rate . Group of answer choices decreases; rises decreases; falls increases; rises increases; falls

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6LO

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Question

When bond prices become more volatile, the demand for bonds ________ and the interest rate ________.

Group of answer choices

decreases; rises

decreases; falls

increases; rises

increases; falls

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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